SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-12
STEWARDSHIP FINANCIAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
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|X| No fee required.
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Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
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(4) Date Filed:_________________________________________________________
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Stewardship Financial Corporation
630 Godwin Avenue
Midland Park, New Jersey 07432-1405
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, MAY 10, 2005
To Our Shareholders:
The Annual Meeting of Shareholders of Stewardship Financial Corporation
(the "Corporation") will be held at the Christian Health Care Center, Wyckoff,
New Jersey, (use Mountain Avenue entrance) on May 10, 2005, at 7:00 P.M. for the
following purposes:
1. To elect the four (4) directors named in the attached Proxy
Statement for three year terms.
2. To transact such other business as may properly come before
the meeting.
Shareholders of record at the close of business on March 21, 2005 are
entitled to notice of, and to vote at, the Annual Meeting. Whether or not you
plan to attend the Annual Meeting, it is requested that the enclosed proxy be
executed and returned to our transfer agent, Registrar and Transfer Company, 10
Commerce Drive, Cranford, NJ 07016, in the envelope provided.
By Order of the Board of Directors
Robert J. Turner
Corporate Secretary
April 5, 2005
Stewardship Financial Corporation
630 Godwin Avenue
Midland Park, New Jersey 07432-1405
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 10, 2005
------------------------------
This Proxy Statement is being furnished to shareholders of Stewardship
Financial Corporation (the "Corporation") in connection with the solicitation by
the Board of Directors of the Corporation of proxies to be used at the Annual
Meeting of Shareholders and at any adjournment of the meeting. You are cordially
invited to attend the Annual Meeting that will be held at the Christian Health
Care Center, Wyckoff, New Jersey, (use Mountain Avenue entrance) on Tuesday, May
10, 2005 at 7:00 P.M. The Annual Report to shareholders, including consolidated
financial statements for the fiscal year ended December 31, 2004, and a proxy
card accompany this Proxy Statement, which is first being mailed to shareholders
on or about April 5, 2005.
Voting of Securities
The securities which may be voted at the Annual Meeting consist of shares
of common stock, no par value, of the Corporation ("Common Stock") with each
share entitling its owner to one vote on each matter properly brought before the
Annual Meeting.
The close of business on March 21, 2005, has been fixed by the Board of
Directors as the record date for the determination of shareholders of record
entitled to notice of, and to vote at, the Annual Meeting or any adjournments
thereof. The total number of shares of Common Stock outstanding on the record
date was 3,376,940 shares.
Regardless of the number of shares of Common Stock you own, it is
important that you vote by completing the enclosed proxy card and returning it
signed and dated in the enclosed postage paid envelope. Proxies solicited by the
Board of Directors of the Corporation will be voted in accordance with the
direction given therein. Where no instructions are indicated, signed proxy cards
will be voted "FOR" the election of each of the nominees for director named in
the Proxy Statement. Should any other matters be properly presented at the
Annual Meeting for consideration, such as consideration of a motion to adjourn
the meeting to another time, the persons named as proxies will have discretion
to vote on those matters according to their best judgment to the same extent as
the person delivering the proxy would be entitled to vote. Other than the
matters set forth in the attached Notice of Annual Meeting of Shareholders, the
Board of Directors knows of no additional matters that may be presented for
consideration at the Annual Meeting.
1
A proxy may be revoked at any time prior to its exercise by sending a
written notice of revocation to Registrar and Transfer Company, 10 Commerce
Drive, Cranford, NJ 07016. In addition, a proxy filed prior to the Annual
Meeting may be revoked by delivering to the Corporation a duly executed proxy
bearing a later date, or by attending the Annual Meeting and voting in person.
If you are a shareholder whose shares are not registered in your own name, you
will need appropriate documentation from your record holder to vote personally
at the Annual Meeting.
Quorum
The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. In the event that there are not
sufficient votes for a quorum, or to approve or ratify any matter being
presented at the time of the Annual Meeting, the Annual Meeting may be adjourned
in order to permit the further solicitation of proxies.
Required Vote
There is no cumulative voting in the election of directors. Directors are
elected by a plurality of votes cast, without regard to either broker non-votes,
or proxies as to which authority to vote for one or more of the nominees is
withheld. Thus, a nominee for director may be elected even if the nominee
receives votes from holders of less than a majority of shares represented at the
meeting.
Cost of Proxy Solicitation
The cost of solicitation of proxies on behalf of the Board of Directors
will be borne by the Corporation. Directors, officers and other employees of the
Corporation may solicit proxies on behalf of the Corporation in person or by
telephone, e-mail, facsimile or other electronic means. These directors,
officers and employees will not receive additional compensation for such
services. The Corporation will reimburse the reasonable expenses of brokerage
firms and other custodians and nominees for sending proxy materials to, and
obtaining proxies from, beneficial owners.
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PROPOSAL 1 -- ELECTION OF DIRECTORS
The Corporation's Certificate of Incorporation and its bylaws authorize a
minimum of one and a maximum of twenty-five directors, but the exact number is
fixed by resolution of the Board of Directors. The Board has fixed the current
number of directors at ten. The Board has been divided into three classes. One
class is elected each year to serve a term of three years. Directors elected at
this Annual Meeting will be elected to serve for a term of three years through
April, 2008, or until their successors are duly elected and qualified.
Each nominee has indicated to the Corporation that he or she will serve if
elected. The Corporation has no reason to believe that any of the nominees will
be unable to stand for election. Unless authority to vote for any of the
nominees is withheld, it is intended that the shares represented by the enclosed
proxy card, if executed and returned, will be voted FOR the election of the
nominees proposed by the Board of Directors. If, for any reason, any of the
nominees becomes unavailable for election, the proxy solicited by the Board of
Directors will be voted for a substitute nominee selected by the Board of
Directors.
The Board of Directors recommends that you vote FOR the election of the
nominees named in this Proxy Statement.
Directors and Nominees for Director
The following sets forth the names of our nominees for director and
directors continuing to serve on our Board following the Annual Meeting; their
ages; a brief description of their recent business experience, including present
occupations; the year in which each became a director of the Corporation and our
wholly-owned subsidiary, Atlantic Stewardship Bank (the "Bank"); and the names
of any public companies for which they serve on the board of directors.
Information With Respect to the Nominees With Terms Expiring in 2008
William C. Hanse, age 70, has been a director of the Corporation since
1997. Mr. Hanse has been a director of the Bank since 1985. Since 1990, Mr.
Hanse has been a partner of the law firm Hanse & Hanse.
Margo Lane, age 54, has been a director of the Corporation since 1997. Ms.
Lane has been a director of the Bank since 1994. Since 2004, Ms. Lane has been
the sales and marketing coordinator of PBI-Dansensor America Inc., a company
that sells and services equipment for industrial instrumentation and process
control. From 1976 to 2002, Ms. Lane served as the corporate communications
manager of Garden State Paper Company, LLC, a newsprint manufacturing company.
Arie Leegwater, age 71, has been a director of the Corporation since 1997
and has been Chairman of the Board since 1997. Mr. Leegwater has been a director
of the Bank since 1985 and has been Chairman of the Board of the Bank since
1994. Since 1988, Mr. Leegwater has been the owner of Arie Leegwater Associates
LLC, a general contracting company. Since 2002, Arie Leegwater has been a
partner in ARIEANJE LLC, a company engaged in owning and renting real estate.
Since 1993, Mr. Leegwater has been an arbitrator with the American Arbitrator
Association.
John L. Steen, age 67, has been a director of the Corporation since 1997
and has been Vice Chairman of the Board since 1997. Mr. Steen has been a
director of the Bank since 1985
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and has been Vice Chairman of the Bank since 1994. Since 1972, Mr. Steen has
been the president of Steen Sales, Inc., a textile company. Since 1972, Mr.
Steen has been president of Dutch Valley Throwing Co., a textile company.
Information With Respect to Directors for Terms Expiring in 2007
Harold Dyer, age 77, has been a director of the Corporation since 1997.
Mr. Dyer has been a director of the Bank since 1985. From 1957 to 1981, Mr. Dyer
was president of White Laundry, Inc., a laundry service company. Mr. Dyer is
currently retired.
Abe Van Wingerden, age 68, has been a director of the Corporation and the
Bank since 2001. Since 1985, Mr. Van Wingerden has been the president of Abe Van
Wingerden Company, Inc. T/A Van Wingerden Farms, a retailer of garden equipment
and supplies.
Information With Respect to the Directors With Terms Expiring in 2006
Robert J. Turner, age 65, has been a director of the Corporation since
1997. Mr. Turner has been a director of the Bank since 1985. From 1966 to 2002,
Mr. Turner was the president of The Turner Group, an insurance brokerage
company. Mr. Turner is currently retired.
William J. Vander Eems, age 55, has been a director of the Corporation
since 1997. Mr. Vander Eems has been a director of the Bank since 1991. Since
1973, Mr. Vander Eems has been the president of William Van Der Eems, Inc., a
general contracting company.
Paul Van Ostenbridge, age 52, has been a director of the Corporation since
1997 and has served as President and Chief Executive Officer of the Corporation
since 1997. Mr. Van Ostenbridge has been a director of the Bank since 1985 and
has served as its president and chief executive officer since 1985.
Committees of the Board of Directors
During 2004, the Board of Directors had a standing Audit Committee,
Nominating Committee, and Compensation Committee. The charters of the Audit
Committee, Nominating Committee and Compensation Committee, as approved by the
Board of Directors in February, 2004, can be found on our website at
www.asbnow.com.
Audit Committee
The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its oversight responsibilities. The Board has adopted a
written charter setting out the functions of the Audit Committee. The audit
functions of the Audit Committee are to: (i) monitor the integrity of the
Corporation's financial reporting process and systems of internal controls; (ii)
monitor the independence and performance of the Corporation's independent
external audit and internal audit functions; (iii) provide avenues of
communication among the independent auditor, management, internal auditors and
the Board of Directors; and (iv) encourage the adherence to, and continuous
improvement of, the Corporation's policies, procedures and practices at all
levels. The Audit Committee also reviews and evaluates the recommendations of
the independent certified public accountant, receives all reports of examination
of the Corporation and the Bank by regulatory agencies, analyzes such regulatory
reports, and informs the Board of the results of their analysis of the
regulatory reports. In addition, the Audit Committee receives reports directly
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from the Corporation's internal auditors and recommends any action to be taken
in connection therewith.
In 2004, the Audit Committee consisted of directors Murphy (Chairman),
Dyer, Steen and Turner. On January 20, 2005, Director Murphy resigned as a
director of Stewardship Financial Corporation. On February 15, 2005 a new audit
committee was formed with members Harold Dyer (Chairman), John Steen and Abe Van
Wingerden.
Nominating Committee
The Nominating Committee nominates candidates to serve on the
Corporation's Board of Directors. In 2004, the Nominating Committee consisted of
directors Steen (Chairman), Hanse Leegwater and Vander Eems.
The Nominating Committee has adopted a procedure to consider
recommendations for directorships submitted by shareholders holding at least 20%
of our outstanding shares for a period of at least four years. Shareholders
meeting these requirements, who wish the Nominating Committee to consider their
recommendations for nominees for the position of director, should submit their
recommendations in writing in care of Corporate Governance, Stewardship
Financial Corporation, 630 Godwin Avenue, Midland Park, New Jersey 07432.
Recommendations by shareholders meeting the share ownership requirements and
that are made in accordance with these procedures will receive the same
consideration given to nominees of the Nominating Committee.
In its assessment of each potential candidate, the Nominating Committee
will review the nominee's judgment, experience, independence, understanding of
the Corporation's or other related industries and such other factors the
Nominating Committee determines are pertinent in light of the current needs of
the Board. The Nominating Committee will also take into account the ability of a
director to devote the time and effort necessary to fulfill his or her
responsibilities.
Nominees may be suggested by directors, members of management,
shareholders or, in some cases, by a third party firm. In identifying and
considering candidates for nomination to the Board of Directors, the Nominating
Committee considers, in addition to the requirements set out in the Nominating
Committee's charter, quality of experience, the needs of the Corporation and the
range of talent and experience represented on the Board.
Compensation Committee
The Compensation Committee oversees the Corporation's and the Bank's
compensation and employee benefit plans and practices, including its executive
compensation plans and its incentive-compensation and equity-based plans. In
2004, the Compensation Committee consisted of directors Turner (Chairman), Lane,
Leegwater, and Van Wingerden.
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Independence of Directors
As of December 31, 2004, the Board of Directors determined that nine of
its ten directors, including all members of the Audit, Nominating and
Compensation Committees, are "independent" as defined in the listing standards
of the NASDAQ Stock Market and SEC rules. Director Van Ostenbridge who serves as
our President and Chief Executive Officer is not considered independent.
Board and Committee Meetings
The Board of Directors of the Corporation held 12 meetings during 2004.
The Audit Committee, Nominating Committee, and Compensation Committee met eight,
four, and six times, respectively, during 2004. The Board of Directors holds
regularly scheduled meetings each month and special meetings as circumstances
require. All of the directors of the Corporation attended at least 75% of the
total number of Board meetings held during 2004. In addition, each director who
is a member of a committee of the Board of Directors attended at least 75% of
the meetings for each committee of which he is a member. Each director of the
Corporation is also a director of the Bank.
The Corporation expects the Directors to attend the annual meeting. The
Directors who attended the 2004 annual meeting were Dyer, Hanse, Lane,
Leegwater, Turner, Vander Eems, Van Ostenbridge and Van Wingerden.
Communications with the Board of Directors
Shareholders are invited to contact the Directors by writing to the
Secretary of the Corporation, Robert J. Turner, at 630 Godwin Avenue, Midland
Park, New Jersey 07432. These communications are not screened.
Compensation Committee Interlocks and Insider Participation
During 2004, no executive officer of the Corporation (i) served as a
member of the Compensation Committee of the Corporation of another entity, one
of whose executive officers served on the Compensation Committee of the
Corporation, (ii) served as a director of another entity, one of whose executive
officers served on the Compensation Committee, or (iii) was a member of the
Compensation Committee of another entity, one of whose executive officers served
as a director of the Corporation.
Compensation of Directors
Directors' Fees
Directors of the Corporation and the Bank, other than full-time employees
of the Corporation and the Bank, receive fees of $1,600 per Board meeting
attended, with the exception of the chairman who receives $2,800 per meeting
attended. Directors of the Corporation and the Bank, other than full-time
employees of the Corporation and the Bank, also receive a fee of $300 per
committee meeting attended.
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Stock Option Plan for Non-Employee Directors
The Corporation maintains the Stewardship Financial Corporation 2001 Stock
Option Plan for Non-Employee Directors (the "2001 Non-Employee Plan"). The
maximum number of shares of Common Stock subject to stock options granted under
the 2001 Non-Employee Plan is 109,395 as adjusted for stock dividends and
splits. As of March 16 2005, 87,516 options to purchase shares of Common Stock
have been granted under the 2001 Non-Employee Plan, of which 40,109 options have
been exercised. The purchase price of the shares of Common Stock subject to
options under the 2001 Non-Employee Plan is 100% of the fair market value on the
date such option is granted. The plan expires on May 9, 2011.
EXECUTIVE OFFICERS
Our executive officers are as follows:
Name Age Position
---- --- --------
Paul Van Ostenbridge 52 President and Chief Executive Officer
Julie E. Holland 45 Vice President and Treasurer
Timothy G. Madden 55 Vice President
Officers are not appointed for fixed terms. Biographical information for
our current officers who are not also directors follows.
Julie E. Holland, age 45, has been vice president and treasurer of the
Corporation since 1997. Ms. Holland joined the Bank in 1994 and has been vice
president and treasurer of the Bank since 1997.
Timothy G. Madden, age 55, has served as vice president of the Corporation
since 2002. Mr. Madden joined the Bank in 2001 and has served as its vice
president since 2001. From 1989 until 2001, Mr. Madden served as the vice
president of private banking at Summit Bank. Mr. Madden has over 30 years
experience in credit, sales and management in the commercial banking field.
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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth a summary of annual compensation for the
last three fiscal years for the president and chief executive officer of the
Corporation and any other executive officers whose individual remuneration
exceeded $100,000.
Long Term
Compensation
Annual Compensation Awards
-------------------------------- ------------------
Securities
Name & Bonus Underlying Options All Other
Principal Position Year Salary ($) ($)(1) (#) Compensation ($)
Paul Van Ostenbridge 2004 198,000 25,000 0 37,498(2)
President and Chief
Executive Officer 2003 190,000 25,000 1,050 32,625
2002 182,500 34,335 0 28,231
Timothy G .Madden 2004 124,000 10,600 0 23,834(3)
Vice President and Senior
Commercial Loan Manager 2003 114,660 10,631 525 17,487
2002 110,250 14,740 0 5,295
Julie E. Holland 2004 89,000 8,100 0 14,874(4)
Vice President and
Treasurer 2003 85,500 8,137 525 13,963
2002 82,300 10,988 0 11,960
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(1) Includes bonuses earned through the Executive Compensation Plan and
accrued during 2004, 2003 and 2002, which were paid in the first quarter
of the following calendar years.
(2) The amounts disclosed for Mr. Van Ostenbridge for fiscal 2004 includes
401(k) matching contributions of $5,069, profit sharing plan contributions
of $17,751, group term life insurance and long term disability payments of
$1,300, medical and vision insurance contributions of $8,521 and the
imputed value of a personal car allowance in the amount of $4,857.
(3) The amounts disclosed for Mr. Madden for fiscal 2004 includes 401(k)
matching contributions of $3,008, profit sharing contributions of $11,290,
group term life insurance
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and long term disability payments of $1,015 and medical and vision
insurance contributions of $8,521.
(4) The amounts disclosed for Ms. Holland includes 401(k) matching
contributions of $2,289, profit sharing contributions of $8,642, group
term life insurance and long term disability payments of $781, and medical
and vision insurance contributions of $3,162.
Stock Option Grants
Option Grants in Last Fiscal Year
The Corporation did not grant any stock options during the fiscal year
ended December 31, 2004.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
The following table sets forth information regarding the aggregated option
exercises during the fiscal year ended December 31, 2004, and the value of
unexercised options held as of December 31, 2004, by each executive officer
named in the Summary Compensation Table. The potential value of unexercised
in-the-money options is based on the closing per share sales price of the
Corporation's Common Stock of $20.99 on December 31, 2004.
Shares
Acquired Number of Securities
on Value Underlying Unexercised Value of Unexcercised
Exercise Realized Options at December 31, In-the-Money Options
Name (#) ($) 2004 (#) December 31, 2004 ($)
---------------------------------------------- ------------------------------ ----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Paul Van Ostenbridge 0 0 31,879 1,648 $453,694 $ 10,187
Timothy G. Madden 0 0 110 441 214 857
Julie E. Holland 0 0 7,767 633 109,008 $ 2,975
Employee Stock Option Plan. The Corporation maintains the Stewardship Financial
Corporation 1995 Stock Option Plan (the "Employee Plan"). Under the Employee
Plan, 142,469 shares of Common Stock have been reserved for issuance. As of
March 16, 2005, 72,902 options to purchase shares of Common Stock have been
granted under the Employee Plan. Employees of the Corporation, the Bank, and any
subsidiaries which the Corporation may incorporate or acquire are eligible to
participate in the Employee Plan. The Compensation Committee manages the
Employee Plan and selects participants from the eligible employees. No options
granted under the Employee Plan may be exercised more than 10 years after the
date of its grant. The purchase price for shares of Common Stock subject to
options under the Plan may not be less than 100% of the fair market value on the
date such options are granted.
Employee Stock Purchase Plan. The Corporation maintains the Stewardship
Financial Corporation 1995 Employee Stock Purchase Plan (the "Purchase Plan").
Under the Purchase Plan, 158,298 shares of Common Stock have been reserved for
issuance. As of March 16, 2005,
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20,512 shares of Common Stock have been purchased under the Purchase Plan.
Shares acquired under the Purchase Plan may be obtained, at the discretion of
the Corporation, from the authorized but unissued shares of Common Stock,
treasury stock or from the open market. Employees of the Corporation, the Bank
and any subsidiaries which the Corporation may incorporate or acquire, who work
at least 20 hours per week, are eligible to participate in the Purchase Plan.
Shares are purchased for participants through payroll deductions in a maximum
amount of 10% of a participant's total compensation per pay period. Eligible
employees must notify the Bank of their participation in the Purchase Plan and
the amount of payroll deductions that will be applied to purchase shares for
them. The funds contributed by each participant are used to purchase shares of
Common Stock at 95% of the fair market value.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Bank maintains a Compensation Committee, which oversees executive
compensation issues. The compensation payable to the Bank's executive officers
is determined by the Board of Directors of the Bank upon recommendation of the
Compensation Committee.
Executive Compensation Policy. The Bank's policy is to compensate its
executives fairly and adequately for the responsibility assumed by them for the
success and direction of the Bank, the effort expended in discharging that
responsibility and the results achieved directly or indirectly from each
executive's performance. "Fair and adequate compensation" is established after
careful review of: (i) the Bank's earnings; (ii) the Bank's performance as
compared to other companies of similar size and market area; and (iii) a
comparison of what the market demands for compensation of similarly situated and
experienced executives.
Total compensation takes into consideration a mix of base salary, bonus,
perquisites and stock options. The particular mix is established in order to
competitively attract competent professionals, retain those professionals and
reward extraordinary achievement. The Board of Directors also considers net
income for the year and earnings per share of the Corporation and the Bank
before finalizing officer compensation increases for the coming year.
Based upon its current levels of compensation, the Bank is not affected by
the provisions of the Internal Revenue Code that limit the deductibility to a
corporation of compensation in excess of $1,000,000 paid to certain executive
officers. Thus, the Bank has no policy regarding that subject.
Base Salary. The Board of Directors of the Bank bears the responsibility
for establishing base salary. Salary is minimum compensation for any particular
position and is not tied to any performance formula or standard. However, that
is not to say that poor performance will not result in termination. Acceptable
performance is expected of all executive officers as a minimum standard. To
establish salary, the following criteria are used: (i) position description;
(ii) director responsibility assumed; (iii) comparative studies of peer group
compensation (special weight is given to local factors as opposed to national
averages); (iv) earnings performance of the Bank resulting in availability of
funds; and (v) competitive level of salary to be maintained to attract and
retain qualified and experienced executives.
Stock Options. Recommendations for stock option awards are made by the
Compensation Committee, which then makes recommendations to the entire Board of
Directors for final action. The Compensation Committee meets to evaluate
meritorious performance of all officers and employees for consideration to
receive stock options.
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The Compensation Committee makes awards based upon the following criteria:
(i) position of the officer or employee in the Bank; (ii) the benefit that the
Bank has derived as a result of the efforts of the award candidate under
consideration; and (iii) the Bank's desire to encourage long term employment of
the award candidate.
Perquisites, such as Corporation and Bank automobiles and their related
expenses and auxiliary insurance benefits, which the Board of Directors of the
Bank may approve from time to time, are determined and awarded pursuant to
evaluation under the same criteria used to establish base salary.
Compensation of CEO. Paul Van Ostenbridge is president and chief executive
officer of the Corporation and the Bank. Mr. Van Ostenbridge has held his
respective positions at the Corporation and the Bank since the inception of both
companies. The Corporation and the Bank have continued to make progress toward
their goals during Mr. Van Ostenbridge's tenure as president and chief executive
officer. In 2004, Mr. Van Ostenbridge's total annual salary compensation
increased 4.2% above his total annual salary compensation in 2003. The Board of
Directors determined that this increase represents fair compensation in view of
Mr. Van Ostenbridge's level of personal performance in 2004, the results
achieved by the Corporation and the Bank, and the compensation levels of other
executives in the banking industry.
Submitted by:
Compensation Committee
Robert J. Turner, Chairperson
Margo Lane
Arie Leegwater
Abe Van Wingerden
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank has made in the past and, assuming continued satisfaction of
generally applicable credit standards, expects to continue to make loans to the
Corporation's and the Bank's directors and executive officers and to
corporations, organizations or other entities for which they serve as officers
or directors, or in which they have beneficial ownership interests of 10 percent
or more. These loans have all been made in the ordinary course of banking
business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than the normal risk of collectability or
present other unfavorable features.
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth information concerning the beneficial
ownership of the Corporation's Common Stock as of March 16, 2005, by (i) each
person who is known by the Corporation to own beneficially more than 5% of the
issued and outstanding Common Stock, (ii) each director and nominee for director
of the Corporation, (iii) each executive officer of the Corporation named in the
Summary Compensation Table and (iv) all directors and executive officers of the
Corporation as a group. Other than as set forth in this table, the Corporation
is not aware of any individual or group, which holds in excess of 5% of the
outstanding Common Stock.
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The percentage of beneficial ownership is based on 3,376,940 shares of Common
Stock outstanding as of March 16, 2005.
Number of Shares Percent
Name of Beneficial Owner (1) Beneficially Owned (2) of Class
---------------------------- ---------------------- --------
William Almroth(3) 174,241 5.16%
Harold Dyer(4) 36,313 1.07%
William C. Hanse(5) 81,803 2.42%
Margo Lane(6) 30,907 *
Arie Leegwater(7) 43,056 1.27%
John L. Steen (8) 75,622 2.24%
Robert J. Turner(9) 88,028 2.60%
William J. Vander Eems(10) 134,778 3.99%
Paul Van Ostenbridge(11) 49,158 1.44%
Abe Van Wingerden(12) 145,083 4.29%
Julie E. Holland(13) 11,101 *
Timothy G. Madden(14) 2,987 *
------- ------
5% Shareholders, Directors and Executive Officers
of the Corporation and Bank as a group
(12 persons) 873,077 25.34%
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* Indicates less than 1% of the outstanding shares of the Corporation's
Common Stock.
(1) Unless noted, the address of each shareholder is c/o Stewardship
Financial Corporation, 630 Godwin Avenue, Midland Park, New Jersey
07432-1405.
(2) Beneficially owned shares include shares over which the named person
exercises either sole or shared voting power or sole or shared investment
power. They also include shares owned (i) by a spouse, minor children or
by relatives sharing the same home, (ii) by entities owned or controlled
by the named person and (iii) if the named person has the right to acquire
such shares within 60 days by the exercise of any right or option. Unless
12
otherwise noted, all shares are owned of record and beneficially by the
named person, either directly or through the Corporation's Dividend
Reinvestment Plan.
(3) Includes 98,848 shares held by Mr. Almroth's spouse in her own name.
Mr. Almroth's address is 210 Totowa Road, Wayne, New Jersey, 07470.
(4) Includes 3,647 shares issuable upon exercise of stock options
exercisable within 60 days of March 16, 2005.
(5) Includes 24,789 shares held jointly by Mr. Hanse and his spouse; 7,127
shares held by Mr. Hanse's spouse in her own name; and 1,824 shares
issuable upon exercise of stock options exercisable within 60 days of
March 16, 2005. Mr. Hanse disclaims beneficial ownership of the common
stock held by his spouse.
(6) Includes 7,624 shares held jointly by Mrs. Lane and her spouse; 522
shares held by Mrs. Lane's spouse as custodian for their children; and
7,293 shares issuable upon exercise of stock options exercisable within 60
days of March 16, 2005. Mrs. Lane disclaims beneficial ownership of the
common stock held by her spouse.
(7) Includes 10,708 shares held jointly by Mr. Leegwater and his spouse;
14,958 shares held by trusts of which Mr. Leegwater is the trustee; and
1,823 shares issuable upon exercise of stock options exercisable within 60
days of March 16, 2005. Mr. Leegwater disclaims beneficial ownership of
the common stock owned by his spouse.
(8) Includes 1,823 shares issuable upon exercise of stock options
exercisable within 60 days of March 16, 2005.
(9) Includes 17,043 shares held jointly by Mr. Turner and his spouse;
2,211 shares held by Mr. Turner's spouse in her own name; and 7,293 shares
issuable upon exercise of stock options exercisable within 60 days of
March 16, 2005. Mr. Turner disclaims beneficial ownership of the common
stock held by his spouse.
(10) Includes 31,269 shares held by Mr. Vander Eems' spouse in her own
name; 6,018 shares held by Mr. Vander Eems as custodian for his child; and
1,823 shares issuable upon exercise of stock options exercisable within 60
days of March 16, 2005. Mr. Vander Eems disclaims beneficial ownership of
the common stock held by his spouse.
(11) Includes 1,008 shares held by Mr. Van Ostenbridge's immediate family
members and 32,645 shares issuable upon exercise of stock options
exercisable within 60 days of March 16, 2005.
(12) Includes 119,087 shares held by Mr. Van Wingerden and his spouse.
Includes 1,823 shares issuable upon exercise of stock options exercisable
within 60 days of March 16, 2005. Mr. Van Wingerden disclaims beneficial
ownership of the common stock held by his spouse.
(13) Includes 7,959 shares issuable upon exercise of stock options
exercisable within 60 days of March 16, 2005.
(14) Includes 110 shares issuable upon exercise of stock options
exercisable within 60 days of March 16, 2005.
13
REPORT OF THE AUDIT COMMITTEE
The role of the Audit Committee is to assist the Board of Directors in its
oversight of the quality and integrity of the Corporation's financial reporting
process. We meet with both the independent auditors and the internal auditors,
each of whom has unrestricted access to the committee. We also meet with
management periodically to consider the adequacy of the Corporation's internal
controls and the objectivity of its financial reporting. We discuss these
matters with the independent auditors, internal auditors and appropriate
financial personnel of the Corporation.
The directors who serve on the committee are all "independent" for the
purposes of Rule 4200(a)(15) of the NASDAQ's listing standards. That is, the
Board of Directors has determined that none of us has a relationship with the
Corporation and the Bank that may interfere with our independence from the
Corporation and its management.
Management has primary responsibility for the Corporation's financial
statements and the overall reporting process, including the Corporation's system
of internal controls. The independent auditors audit the financial statements
prepared by management, express an opinion as to whether those financial
statements fairly present the financial position, results of operations, and
cash flows of the Corporation in conformity with generally accepted accounting
principles and discuss with us any issues they believe should be raised with us.
This year, we reviewed the Corporation's audited financial statements and
met with both management and KPMG LLP, the Corporation's independent auditors,
to discuss those financial statements. Management has represented to us that the
financial statements were prepared in accordance with generally accepted
accounting principles.
We have received from and discussed with KPMG LLP the written disclosure
and the letter required by Independence Standards Boards No. 1 (Independence
Discussions with Audit Committees). These items relate to that firm's
independence from the Corporation. We also discussed with KPMG LLP any matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
Based on these reviews and discussions, we recommended to the Board that
the Corporation's audited financial statements be included in the Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31, 2004.
Submitted by:
Audit Committee
Harold Dyer, Chairman
John L. Steen
Abe Van Wingerden
14
INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors of the Corporation and the
Bank has recommended the retention of KPMG LLP to act as independent public
accountants for the Corporation and the Bank for the fiscal year ending 2005.
KPMG LLP has acted as the Corporation's and the Bank's independent public
accountants for the fiscal years ended December 31, 1996 through 2004.
KPMG LLP has advised the Corporation that one or more of its
representatives will be present at the Annual Meeting to make a statement if
they so desire and to respond to appropriate questions.
Fees Billed by KPMG During Fiscal Year 2004 and Fiscal Year 2003
Audit Fees
The aggregate fees billed for professional services by KPMG LLP in
connection with the audit of the financial statements for the fiscal year ended
2004, and the reviews of the financial statements for each of the first three
fiscal quarters in 2004, were approximately $65,000. The aggregate fees billed
for professional services by KPMG LLP in connection with the audit of the
financial statements for the fiscal year ended 2003, and the reviews of the
financial statements for each of the first three fiscal quarters in 2003, were
approximately $61,000.
Audit-Related Fees
There were no fees billed for audit-related fees by KPMG LLP for the
fiscal years ended 2004 and 2003, respectively.
Tax Fees
KPMG LLP billed the Corporation $21,500 and $20,500 for the fiscal years
ended 2004 and 2003, respectively, for tax compliance services.
All Other Fees
There were no other fees billed by KPMG LLP for the fiscal years ended
2004 and 2003, respectively.
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the independence of KPMG LLP.
Pre-Approval of Audit and Permissible Non-Audit Services
The Audit Committee pre-approves all audit and permissible non-audit
services provided by the independent auditors. These services may include audit
services, audit-related services, tax services and other services. The Audit
Committee has adopted a policy for the pre-approval of services provided by the
independent auditors. Under the policy, pre-approval is generally provided for
up to one year and any pre-approval is detailed as to the particular service or
category of services and is subject to a specific budget. In addition, the Audit
Committee may pre-approve particular services on a case-by-case basis. For each
proposed service, the independent auditor is required to provide detailed
back-up documentation at the time of
15
approval. All audit and permissible non-audit services provided by KPMG LLP to
the Corporation for the fiscal years ended 2004 and 2003 were approved by the
Audit Committee.
PERFORMANCE GRAPH
The Performance Line Graph presents the total return to the Corporation's
shareholders for the period December 31, 1999 through December 31, 2004. The
Corporation's Common Stock is compared to the NASDAQ Composite Index and a peer
group consisting of ten banks located in the Mid-Atlantic region with total
asset size similar to that of the Corporation. The peer group consists of 1st
Constitution Bancorp, Boardwalk Bank, Central Jersey Bancorp, Codorus Valley
Bancorp, Inc., Community Bank of Bergen County, First Morris Bank & Trust,
Juniata Valley Financial Corp., Sterling Bank, Sussex Bancorp and Unity Bancorp,
Inc. The information in this graph is not necessarily indicative of the
Corporation's future performance.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
Nasdaq
Composite
SSFN Index Peer Index FWFC MBP CVLY PFIS SRCK EGBN CBNJ CRRB JFBC UNNF
12/31/97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
12/31/98 130.49 140.10 120.97 176.92 83.45 87.79 155.07 222.35 73.21 115.52 96.55 113.14 85.72
12/31/99 144.83 260.51 112.59 185.77 87.82 91.80 173.25 107.97 75.00 105.66 91.04 126.53 81.08
12/31/00 141.48 158.57 96.54 160.19 62.01 88.65 148.69 64.26 74.78 105.35 73.38 123.88 64.23
12/31/01 162.52 125.59 114.10 166.79 78.55 82.49 174.46 80.64 126.87 126.09 83.66 145.50 75.90
12/31/02 169.25 86.40 153.94 183.47 98.40 99.98 199.60 77.36 170.75 224.98 93.77 298.04 93.05
Nasdaq
Composite
SSFN Index Peer Index FCCY CBNJ FWFC SBB SVBF UNTY STNJ EGBN JUVF MBP
12/31/98 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
12/31/99 110.99 185.95 93.30 127.75 91.47 105.00 83.20 87.91 56.64 82.50 102.44 90.81 105.24
12/31/00 108.42 113.19 79.36 88.75 91.20 90.54 104.49 88.46 18.88 61.03 102.13 73.83 74.31
12/31/01 124.54 89.64 107.98 178.27 109.15 94.27 106.43 107.79 61.36 61.19 173.29 93.95 94.13
12/31/02 129.70 61.67 143.34 254.41 194.76 103.70 109.02 183.17 77.78 60.78 233.22 98.63 117.92
12/31/03 240.43 92.90 184.20 290.44 257.87 169.78 176.46 190.55 113.59 82.48 301.68 119.71 139.47
Nasdaq
Composite
SSFN Index Peer Index FCCY FMJE SBB UNTY BORD STNJ CJBK CMTB JUVF CVLY
12/31/99 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
12/31/00 97.69 60.87 81.68 69.47 76.95 125.59 33.33 80.88 73.98 97.78 80.99 81.30 96.57
12/31/01 112.21 48.21 109.59 139.55 107.49 127.92 108.33 90.00 74.17 138.91 116.16 103.46 89.86
12/31/02 116.86 33.17 127.41 199.14 122.22 131.04 137.33 115.88 73.67 170.29 106.97 108.62 108.91
12/31/03 223.42 49.96 180.53 227.35 162.58 212.09 200.57 165.37 99.98 314.21 130.87 131.83 160.45
12/31/04 222.02 54.51 230.86 271.69 267.06 217.12 238.52 225.88 115.01 496.66 148.85 168.66 159.10
Peers = FCCY, FMJE, SBB, UNTY, BORD, STNJ, CJBK, CMTB, JUVF, CVLY = 8 NJ-based
commercial banks close in asset size for which historical stock price data was
available for the relevant time period and 2 PA-based commercial banks (JUVF,
CVLY) close in asset size with comparable operating performance in terms of
return on average equity and return on average assets.
16
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and directors, and persons who own more than 10% of a
registered class of the Corporation's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than 10% shareholders are required by regulation
of the Securities and Exchange Commission to furnish the Corporation with copies
of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Corporation believes
that, during the fiscal year ended December 31, 2004, all filing requirements
applicable to its officers, directors and greater than 10% shareholders were
timely met.
ANNUAL REPORT ON FORM 10-K
The Corporation will furnish without charge its annual report on Form 10-K
upon receipt of your written request therefore. Requests should be sent to the
Secretary of the Corporation at 630 Godwin Avenue, Midland Park, New Jersey
07432.
SHAREHOLDER PROPOSALS
Shareholders who wish to present proposals to be included in the Corporation's
2006 proxy materials must submit such proposals to the Secretary of the
Corporation at 630 Godwin Avenue, Midland Park, New Jersey 07432 by December 6,
2005. For any proposal that is not submitted for inclusion in next year's proxy
materials, but is instead sought to be presented directly at the 2006 Annual
Meeting, SEC rules permit the Corporation to exercise discretionary voting
authority to the extent conferred by proxy if the Corporation: (1) receives
notice of the proposal before February 19, 2006 and advises shareholders in the
2006 proxy statement of the nature of the proposal and how management intends to
vote on such matter or (2) does not receive notice of the proposal before
February 19, 2006. Notices of intention to present proposals at the 2006 Annual
Meeting should be submitted to the Secretary of the Corporation at 630 Godwin
Avenue, Midland Park, New Jersey 07432.
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come before
the Annual Meeting; however, in the event such other matters come before the
meeting, it is the intention of the persons named in the proxy to vote on any
such matters in accordance with the recommendation of the Board of Directors.
17
PROXY
STEWARDSHIP FINANCIAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 10, 2005
The undersigned hereby appoints Janyce Bandstra, Alan Stiles and Howard
Yeaton , and each of them, with full power of substitution, as proxies for the
undersigned to attend the annual meeting of shareholders of Stewardship
Financial Corporation (the "Corporation"), to be held at the Christian Health
Care Center, Mountain Avenue entrance, Wyckoff, New Jersey 07481, on May 10,
2005, at 7:00 p.m., or any adjournment thereof, and to vote the number of shares
of Common Stock of the Corporation that the undersigned would be entitled to
vote, and with all the power the undersigned would possess, if personally
present, as follows:
1. To elect the following nominees for election as directors:
William C. Hanse
Margo Lane
Arie Leegwater
John L. Steen
|_| FOR ALL NOMINEES
|_| WITHHOLD AUTHORITY
(To withhold authority to vote for an individual nominee, write
the nominee's name on the line provided below)
__________________________
The Proxies will vote as specified herein or, if a choice is not
specified, they will vote "FOR" the proposal set forth above. In their
discretion, the Proxies are authorized to vote upon such other matters as may
properly come before the meeting or any adjournment thereof.
This Proxy is solicited by the Board of Directors of the Corporation.
When shares are held by two or more persons as joint tenants, both or all
should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
DATED: ________________ _______________________________
_______________________________
_______________________________
_______________________________
Signature