MIDLAND PARK, NJ -- (Marketwire) -- 08/16/10 -- Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, reported a net loss for the three months ended June 30, 2010 of $1.1 million, or $0.21 per diluted common share, as compared to net income of $780,000, or $0.11 per diluted common share, for the three months ended June 30, 2009. For the six months ended June 30, 2010, the Corporation reported a net loss of $194,000, or $0.08 per diluted common share, compared to net income of $2.0 million, or $0.30 per diluted common share for the corresponding six month period in 2009. The second quarter results were negatively impacted by a much larger than normal loan loss provision reflecting an increase in nonperforming loans. All per share calculations have been adjusted for a 5% stock dividend paid in November 2009.

The Corporation recorded a $4.705 million provision for loan losses for the three months ended June 30, 2010 bringing the year to date provision for loan losses to $6.255 million. These amounts compare to provision for loan losses of $1.025 million and $1.175 million for the three and six month periods ended June 30, 2009, respectively. Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer stated, "The increased loan loss provision reflects appropriate and careful monitoring of the loan portfolio and, in light of the current weak economic environment, the increase in provision for loan losses was prudent." When determining the appropriate amount of the allowance for loan losses at a particular date, the Corporation considers a number of factors including past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. The total allowance for loan losses increased to 1.91% of total loans from a comparable ratio of 1.50% at December 31, 2009 and 1.44% at June 30, 2009.

Nonperforming loans totaled $26.9 million, or 5.88% of total loans at June 30, 2010, an increase from $22.3 million, or 4.83% at March 31, 2010. With respect to the problem loans, Van Ostenbridge commented, "Nonperforming loans remain a challenge." Van Ostenbridge continued, "We are being diligent in identifying and dealing with problem credits and we remain focused on mitigating future losses in our portfolio. We recognize there is still work to do and reducing nonperforming assets remains a key priority for the remainder of 2010. We are, however, cautiously optimistic as we saw a reduction in the level of loans past due 30-89 days which totaled $4.0 million at the end of June -- a significant decline from $9.7 million at the end of March."

Net interest income for the three and six months ended June 30, 2010 showed increases of $103,000 and $684,000, respectively, when compared to the prior year periods. For the three months ended June 30, 2010, the net interest spread and margin of 3.48% and 3.84%, respectively, were comparable to 3.45% and 3.89%, respectively, for the three months ended June 30, 2009. The reported net interest spread and margin for the six months ended June 30, 2010 of 3.61% and 3.96%, respectively, show improvement when compared to the net interest spread and margin of 3.44% and 3.88%, respectively, for the six months ended June 30, 2009. The current period net interest spreads and margins reflect lower yields on earning assets offset by a reduction in the cost of liabilities. The lower yield on earning assets for the current year periods shows the effects of the prolonged low interest rate environment. Lower funding costs, principally explained by the repricing of deposits at the current lower rates, offset the impact of the lower yield and helped maintain the net interest margin.

For the current year periods, nearly all categories of noninterest income showed improvement. The increase in fees and service charges is partially the result of higher debit card related income due to increased customer usage. Gain on calls and sales of securities of $474,000 and $802,000 were realized for the three and six months ended June 30, 2010, respectively. In connection with continuing efforts to manage the risk profile of the securities portfolio and overall balance sheet, sales of securities were a proactive step to address the anticipated impact of rising interest rates and provided the Corporation with additional liquidity.

FDIC insurance expense for the prior year three and six month periods included an additional $300,000 for the special assessment imposed on all FDIC-insured depository institutions.

Total assets at June 30, 2010 were $674.9 million, a slight increase from assets of $663.8 million at December 31, 2009. The composition of the balance sheet at June 30, 2010 reflects an emphasis on maintaining strong liquidity.

Total deposits were $561.2 million at June 30, 2010, representing solid growth of $31.3 million when compared to deposits of $529.9 million at December 31, 2009. The growth in deposits consisted of both interest-bearing and non-interest bearing accounts, demonstrating appropriate product offerings. As a result of the deposit growth, other borrowings were reduced $18.6 million since December 31, 2009.

Van Ostenbridge concluded, "We are operating in a fragile economy and challenging credit environment. While the elevated loan loss provision has a negative impact on current year earnings, we believe that the actions taken to identify and manage credit risk in our portfolio has significantly strengthened the balance sheet and positioned the company for earnings improvement in the future. We recognize that improving asset quality will lead to a more consistent level of profitability for the future. Our capital position, nevertheless, remains solid with all capital ratios exceeding the regulatory amount needed to be considered 'well capitalized'."

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'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.

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.

                     Stewardship Financial Corporation
                Selected Consolidated Financial Information
              (dollars in thousands, except per share amounts)
                                (unaudited)


                           June 30,    March 31,   December 31,   June 30,
                             2010         2010         2009         2009
                         -----------  -----------  -----------  -----------

Selected Financial
 Condition Data:
  Cash and cash
   equivalents           $    19,452  $    12,196  $     8,871  $    11,401
  Securities available
   for sale                  116,009       93,926      103,026       87,728
  Securities held to
   maturity                   56,836       70,758       67,717       74,756
  FHLB Stock                   2,497        2,390        3,227        2,538
  Loans receivable:
    Loans receivable,
     gross                   458,102      461,877      460,476      440,434
    Allowance for loan
     losses                   (8,745)      (8,174)      (6,920)      (6,342)
    Other, net                  (350)        (422)        (437)        (425)
                         -----------  -----------  -----------  -----------
  Loans receivable, net      449,007      453,281      453,119      433,667

  Loans held for sale          3,059        2,724          660        6,379
  Other assets                28,050       26,951       27,224       22,858
                         -----------  -----------  -----------  -----------
  Total assets           $   674,910  $   662,226  $   663,844  $   639,327
                         ===========  ===========  ===========  ===========

  Deposits:
  Total deposits         $   561,183  $   542,930  $   529,930  $   518,500
  Other borrowings            36,000       36,000       54,600       39,300
  Subordinated
   debentures                  7,217        7,217        7,217        7,217
  Securities sold under
   agreements to
   repurchase                 15,400       15,399       15,396       15,163
  Other liabilities            2,412        6,677        3,190        5,943
  Stockholders' equity        52,698       54,003       53,511       53,204
                         -----------  -----------  -----------  -----------
  Total liabilities and
   stockholders' equity  $   674,910  $   662,226  $   663,844  $   639,327
                         ===========  ===========  ===========  ===========

  Book value per common
   share                 $      7.39  $      7.57  $      7.50  $      7.46

  Equity to assets              7.81%        8.15%        8.06%        8.32%

Asset Quality Data:
  Nonaccrual loans       $    25,712  $    19,525  $    19,656  $    11,533
  Loans past due 90 days
   or more and accruing            -            -          415            -
  Restructured loans           1,210        2,775        2,846        2,460
                         -----------  -----------  -----------  -----------
  Total nonperforming
   loans                 $    26,922  $    22,300  $    22,917  $    13,993
                         ===========  ===========  ===========  ===========

  Non-performing loans
   to total loans               5.88%        4.83%        4.98%        3.18%
  Non-performing loans
   to total assets              3.99%        3.37%        3.45%        2.19%
  Allowance for loan
   losses to
   nonperforming loans         32.48%       36.65%       30.20%       45.32%
  Allowance for loan
   losses to total gross
   loans                        1.91%        1.77%        1.50%        1.44%

All share data has been restated to include the effects of a
5% stock dividend paid in November 2009.

                     Stewardship Financial Corporation
                Selected Consolidated Financial Information
              (dollars in thousands, except per share amounts)

                            For the three                For the six
                             months ended                months ended
                               June 30,                    June 30,
                      -------------------------   -------------------------
                          2010          2009          2010          2009
                      -----------   -----------   -----------   -----------
Selected Operating
Data:
  Interest income    $      8,201  $      8,542  $     16,696  $     17,015
  Interest expense          2,278         2,722         4,594         5,597
                      -----------   -----------   -----------   -----------
    Net interest and
    dividend income         5,923         5,820        12,102        11,418
  Provision for loan
  losses                    4,705         1,025         6,255         1,175
                      -----------   -----------   -----------   -----------
  Net interest and
  dividend income
  after provision
  for loan losses           1,218         4,795         5,847        10,243
  Non-interest
  income:
    Fees and service
    charges                   503           474           972           870
    Bank owned life
    insurance                  81            76           167           159
    Gain on sales of
    mortgage loans             66            73           121            84
    Gain on calls
    and sales of
    securities                474           214           802           253
    Merchant
    processing                  -             -             -           118
    Other                     123           112           196           172
                      -----------   -----------   -----------   -----------
    Total
    noninterest
    income                  1,247           949         2,258         1,656
  Non-interest
  expenses:
    Salaries and
    employee
    benefits                1,948         2,077         4,074         4,136
    Occupancy, net            481           473           970           945
    Equipment                 277           253           586           518
    Data processing           327           277           652           582
    FDIC insurance
    premium                   237           519           461           689
    Merchant
    processing                  -             -             -           108
    Other                     901         1,085         1,852         2,114
                      -----------   -----------   -----------   -----------
    Total
    noninterest
    expenses                4,171         4,684         8,595         9,092
                      -----------   -----------   -----------   -----------
  (Loss) income
  before income
  taxes                    (1,706)        1,060          (490)        2,807
  Income tax
  (benefit) expense          (641)          280          (296)          840
                      -----------   -----------   -----------   -----------
  Net (loss) income        (1,065)          780          (194)        1,967
  Dividends on
  preferred stock             138           137           275           229
                      -----------   -----------   -----------   -----------
  Net (loss) income
  available to
  common
  stockholders       $     (1,203) $        643  $       (469) $      1,738
                      ===========   ===========   ===========   ===========

  Weighted avg. no.
  of diluted common
  shares                5,842,366     5,835,785     5,841,176     5,835,434
  Diluted (loss)
  earnings per
  common share       $      (0.21) $       0.11  $      (0.08) $       0.30

  Return on average
  common equity             -8.87%         4.78%        -1.74%         6.78%

  Return on average
  assets                    -0.64%         0.49%       -0.06%          0.62%

  Yield on average
  interest-earning
  assets                     5.28%         5.67%         5.43%         5.74%
  Cost of average
  interest-bearing
  liabilities                1.80%         2.22%         1.82%         2.30%
                      -----------   -----------   -----------   -----------
  Net interest rate
  spread                     3.48%         3.45%         3.61%         3.44%
                      ===========   ===========   ===========   ===========

  Net interest
  margin                     3.84%         3.89%         3.96%         3.88%

All share data has been restated to include the effects of a
5% stock dividend paid in November 2009.