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

EXHIBIT 99.1

For Immediate Release
Contact:	Claire M. Chadwick
	SVP and Chief Financial Officer
	630 Godwin Avenue
	Midland Park, NJ 07432
	201- 444-7100

PRESS RELEASE

Stewardship Financial Corporation Reports

Third Quarter 2010 Results

Midland Park, NJ – November 1, 2010 – Stewardship Financial Corporation (NASDAQ:SSFN), parent of Atlantic Stewardship Bank, reported net income for the three months ended September 30, 2010 of $340,000, or $0.03 per diluted common share, as compared to earnings of $893,000, or $0.13 per diluted common share, for the three months ended September 30, 2009.  For the nine months ended September 30, 2010, the Corporation reported net income of $146,000 compared to net income of $2.9 million for the corresponding nine month period in 2009.  After dividends on preferred stock, the net loss to the common shareholders was $266,000 for the first nine months of 2010, or $0.05 pe r diluted common share, compared to net income of $2.5 million, or $0.43 per diluted common share, during the same period in 2009.  The reduced earnings in the current year periods is primarily related to a higher provision for loan losses.

Stewardship Financial Corporation’s President and Chief Executive Officer Paul Van Ostenbridge commented, “We continue to address asset quality and are working to reduce the current elevated level of nonperforming loans.”  Modest improvement was seen, with September 30, 2010 nonperforming loans amounting to $24.5 million, representing 5.43% of

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Stewardship Financial Corporation continued	November 1, 2010

total loans, which compares favorably to $26.9 million, or 5.88% at June 30, 2010.  In addition, the level of loans past due between 30-89 days remained at $4.0 million at the end of September, reflecting stabilization when compared to June and a significant improvement from a $9.7 million level at the end of March.

For the three months ended September 30, 2010 the Corporation recorded a $1.5 million provision for loan losses, or $7.8 million on a year to date basis.  At September 30, 2010, the total allowance for loan losses represented 2.07% of total loans compared to a ratio of 1.91% at June 30, 2010 and 1.50% as of December 31, 2009.  Furthermore, the ratio of allowance for loans losses to nonperforming loans was 38.09% at September 30, 2010, providing improved allowance coverage as compared to levels of 32.48% and 30.20% as of June 30, 2010 and December 31, 2009, respectively.

For the three and nine months ended September 30, 2010 net interest income was generally comparable to the prior year periods.  The net interest spread of 3.53% for the three months ended September 30, 2010 increased slightly from 3.47% for the three months ended September 30, 2009.  Net interest margin decreased slightly to 3.83% for the current three month period from 3.92% for the same prior year period.  The reported net interest spread and margin for the nine months ended September 30, 2010 of 3.56% and 3.90%, respectively, show improvement when compared to the net interest spread and margin of 3.44% and 3.89%, respectively, for the nine months ended September 30, 2009.  Disciplined pricing of deposit products served to offset a decline in yields on earning assets in the current year periods.

Focus on controlling noninterest expense continues, with the goal of operating more efficiently in the current business environment.  A portion of the increase in expenses in the current year, nevertheless, is associated with managing the higher volume of nonperforming loans.

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Stewardship Financial Corporation continued	November 1, 2010

Total assets of $680.1 million at September 30, 2010 show a modest increase when compared to $663.8 million of assets at December 31, 2009.  While deposit growth has been strong, loan demand is more reflective of consumer and business spending patterns in these times of economic uncertainty.  In the current environment, therefore, the balance sheet has benefited from planned additional liquidity.

Deposits continue to grow, reaching $565.8 million at September 30, 2010 compared to deposits of $529.9 million at December 31, 2009.  Noninterest-bearing deposits represented 18.2% of total deposits at September 30, 2010, up from 16.7% at December 31, 2009.  The increase in deposits has enabled the Corporation to reduce other borrowings by $18.6 million since December 31, 2009.

With a tier 1 leverage ratio of 8.64% and total risk based capital ratio of 13.29%, the Corporation’s capital ratios far exceed the regulatory requirements for a “well capitalized” institution.  Maintaining strong capital levels remains a primary objective of our Board.

In closing Van Ostenbridge reiterated, “Our ability to grow net interest income as well as fees and service charges improves our core earnings during this difficult period.  By reducing our nonperforming assets we will be in a position to lower our provision for loan losses which, in turn, will generate even stronger earnings.”

Stewardship Financial Corporation’s subsidiary, the Atlantic Stewardship Bank, has 13 banking offices in Midland Park, Hawthorne (2), Montville, North Haledon, Pequannock, Ridgewood, Waldwick, Wayne (3), Westwood and Wyckoff, New Jersey.  The Bank is known for tithing 10% of its pre-tax profits to Christian and local charities.  The Bank is currently celebrating its twenty–fifth year of operation.  The Bank’s tithe amounts to over $7.0 million in total donations since the program began.

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

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Stewardship Financial Corporation continued	November 1, 2010

The information disclosed in this document contains certain “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “plan,” “estimate,” and “potential.”  Examples of forward looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of the Corporation that are subject to various factors which could cause actual results to differ materially from these estimates.  These factors include: changes in general , economic and market conditions, legislative and regulatory conditions, or the development of an interest rate environment that adversely affects the Corporation’s interest rate spread or other income anticipated from operations and investments.

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Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
	September 30, 2010			June 30, 2010			December 31, 2009			September 30, 2009
Selected Financial Condition Data:
Cash and cash equivalents	$	25,158		$	19,452		$	8,871		$	13,646
Securities available for sale		127,348			116,009			103,026			90,460
Securities held to maturity		47,434			56,836			67,717			75,232
FHLB Stock		2,497			2,497			3,227			3,195
Loans receivable:
Loans receivable, gross		450,507			458,102			460,476			451,229
Allowance for loan losses		(9,327	)		(8,745	)		(6,920	)		(7,249	)
Other, net		(290	)		(350	)		(437	)		(428	)
Loans receivable, net		440,890			449,007			453,119			443,552
Loans held for sale		9,326			3,059			660			1,018
Other assets		27,409			28,050			27,224			22,518
Total assets	$	680,062		$	674,910		$	663,844		$	649,621
Deposits:
Total deposits	$	565,845		$	561,183		$	529,930		$	514,612
Other borrowings		36,000			36,000			54,600			53,900
Subordinated debentures		7,217			7,217			7,217			7,217
Securities sold under agreements to repurchase		15,241			15,400			15,396			16,019
Other liabilities		2,910			2,412			3,190			3,801
Stockholders' equity		52,849			52,698			53,511			54,072
Total liabilities and stockholders' equity	$	680,062		$	674,910		$	663,844		$	649,621
Book value per common share	$	7.37		$	7.39		$	7.50		$	7.60
Equity to assets		7.77	%		7.81	%		8.06	%		8.32	%
Asset Quality Data:
Nonaccrual loans	$	24,334		$	25,712		$	19,656		$	14,536
Loans past due 90 days or more and accruing		10			-			415			728
Restructured loans		140			1,210			2,846			2,417
Total nonperforming loans		24,484			26,922			22,917			17,681
Other real estate owned		356			-			-			-
Total nonperforming assets	$	24,840		$	26,922		$	22,917		$	17,681
Non-performing loans to total loans		5.43	%		5.88	%		4.98	%		3.92	%
Non-performing assets to total assets		3.65	%		3.99	%		3.45	%		2.72	%
Allowance for loan losses to nonperforming loans		38.09	%		32.48	%		30.20	%		41.00	%
Allowance for loan losses to total gross loans		2.07	%		1.91	%		1.50	%		1.61	%

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Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
	For the three months ended September 30,						For the nine months ended September 30,
	2010			2009			2010			2009
Selected Operating Data:
Interest income	$	8,095		$	8,610		$	24,791		$	25,625
Interest expense		2,145			2,634			6,739			8,231
Net interest income		5,950			5,976			18,052			17,394
Provision for loan losses		1,500			1,200			7,755			2,375
Net interest income after provision
for loan losses		4,450			4,776			10,297			15,019
Noninterest income:
Fees and service charges		514			492			1,486			1,362
Bank owned life insurance		82			79			249			238
Gain on sales of mortgage loans		94			188			215			272
Gain on calls and sales of securities		-			2			802			255
Merchant processing		-			-			-			118
Other		69			60			265			232
Total noninterest income		759			821			3,017			2,477
Noninterest expenses:
Salaries and employee benefits		2,077			2,128			6,151			6,264
Occupancy, net		501			453			1,471			1,398
Equipment		285			277			871			795
Data processing		334			300			986			882
FDIC insurance premium		251			197			712			886
Charitable contributions		150			120			300			411
Merchant processing		-			-			-			108
Other		1,010			871			2,712			2,694
Total noninterest expenses		4,608			4,346			13,203			13,438
Income before income taxes		601			1,251			111			4,058
Income tax (benefit) expense		261			358			(35	)		1,198
Net income		340			893			146			2,860
Dividends on preferred stock and accretion		137			138			412			367
Net (loss) income available to common stockholders	$	203		$	755		$	(266	)	$	2,493
Weighted avg. no. of diluted common shares		5,842,366			5,837,797			5,842,565			5,836,225
Diluted (loss) earnings per common share	$	0.03		$	0.13		$	(0.05	)	$	0.43
Return on average common equity		1.51	%		5.59	%		-0.66	%		6.37	%
Return on average assets		0.20	%		0.55	%		0.03	%		0.60	%
Yield on average interest-earning assets		5.18	%		5.61	%		5.32	%		5.69	%
Cost of average interest-bearing liabilities		1.65	%		2.14	%		1.76	%		2.25	%
Net interest rate spread		3.53	%		3.47	%		3.56	%		3.44	%
Net interest margin		3.83	%		3.92	%		3.90	%		3.89	%

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