ex99-1.htm

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

Earnings for the Year Ended December 31, 2009

Midland Park, NJ – February 8, 2010 – Stewardship Financial Corporation (NASDAQ:SSFN), the holding company for Atlantic Stewardship Bank, reported net income for the year ended December 31, 2009 of $3.6 million, or $0.54 per diluted common share, compared to net income of $3.5 million, or $0.60 per diluted common share, for the year ended December 31, 2008. For the three months ended December 31, 2009 net income was $774,000, or $0.11 per diluted common share, compared to net income of $423,000, or $0.07 per diluted common share, for the same prior year period. All per share calculations have been adjusted for 5% stock dividends paid in November 2009 and 2008.

“We are pleased to report that Stewardship Financial Corporation had another profitable year despite facing economic and unprecedented challenges in 2009,” said Paul Van Ostenbridge, President and Chief Executive Officer. Positives for 2009 included effective cost control efforts, a relatively stable net interest margin, strong levels of noninterest income, robust core deposit growth and a solid investment portfolio. The effects of increases in net interest income and noninterest income, including gains from the sale of mortgages, were largely offset by increased costs associated with Federal Deposit Insurance Corporation (FDIC) deposit insurance premiums.

Press Release - Midland Park NJ
Stewardship Financial Corporation continued	February 8, 2010

The Corporation reported net interest income for the year ended December 31, 2009 of $23.3 million, representing an increase of 4.7% over the comparable prior year amount. Net interest income and margin remained strong during 2009 as a result of proactively managing funding costs in an effort to mitigate the lower asset yields attributable to historically low market rates. The reported net interest spread and margin for the year ended December 31, 2009 of 3.45% and 3.89%, respectively, were comparable to the net interest spread and margin of 3.43% and 4.00%, respectively, for the prior year.

For both the years ended December 31, 2009 and 2008 the Corporation recorded a provision for loan losses amounting to $3.6 million. While the provision for loan losses in 2008 was a direct result of problems related to a few commercial credit facilities, the current year provision for loan losses is reflective of current economic conditions that have contributed to an increase in loan delinquencies and the softness in the real estate market. At December 31, 2009, the total allowance for loan losses amounted to $6.9 million, or 1.50% of total loans, as compared to $5.2 million, or 1.18% of total loans, at December 31, 2008.

Van Ostenbridge commented, “Asset quality issues, caused by the economic downturn which began in 2008, were a major area of concern for all of 2009.” Non-performing loans amounted to 4.98% of total loans at December 31, 2009 compared to 1.46% at December 31, 2008. Van Ostenbridge went on to state, “To address credit issues and help maintain profitability going forward, management has been diligent in efforts to identify and resolve nonperforming loans.”

At the end of 2008, the Corporation sold its merchant servicing portfolio and, as a result, a decline in both noninterest income and noninterest expense is reflected for the year ended December 31, 2009.

Press Release - Midland Park NJ
Stewardship Financial Corporation continued	February 8, 2010

As a result of increased attention to controlling operating costs, noninterest expense declined in 2009 when compared to 2008. However, offsetting decreases in certain expense line items was a significant increase in FDIC insurance premiums for all insured financial institutions. In addition to an industry-wide increase in regular assessment rates, FDIC insurance premiums include a $300,000 special FDIC assessment imposed during 2009.

At December 31, 2009 total assets were $663.8 million, compared to $611.8 million at December 31, 2008. The securities available for sale and held to maturity portfolios together increased $31.9 million, primarily reflecting the leverage strategy undertaken to invest the $10 million in funds raised through the issuance of preferred stock under the Capital Purchase Program (the “CPP”). Despite a difficult economic environment, gross loans receivable grew $20.8 million, or 4.7%, to $460.5 million at December 31, 2009. Included in assets at December 31, 2009 was approximately $3.2 million for the FDIC mandated prepayment of insurance premiums representing estimated FDIC assessments through December 31, 2012, which will be reduced over the next three years as actual FDIC assessments are incurred.

Deposits totaled $529.9 million at December 31, 2009. Deposits at December 31, 2008 of $506.5 million included $30.7 million of brokered CDs. After the payoff of these brokered CDs, growth in core customer deposits totaled $54.1 million, or over 11%. The early 2009 introduction of our new Power Rate checking product was a primary driving force in the growth in deposits. This new account pays a premium rate of interest and refunds ATM fees charged by other financial institutions. In return, the customer has simple monthly qualification factors such as enrolling in online banking with electronic statements and minimum levels of debit card usage.

Total stockholders’ equity at December 31, 2009 of $53.5 million includes the increase from the $10 million received on January 30, 2009 under the CPP. Van Ostenbridge summarized, “While we remain guardedly optimistic about improvement in the economy and stabilization of real

Press Release - Midland Park NJ
Stewardship Financial Corporation continued	February 8, 2010

estate values, the Corporation’s strong capital position provides us with the ability to withstand further challenges. In addition to our standard objectives of growing core deposits and lending those funds in our communities, and the resolution of credit issues, the Corporation has been investing in new products and services to meet the increasingly sophisticated needs of our commercial and retail customers.”

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 $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


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

	December 31,			September 30,			December 31,
	2009			2009			2008

Selected Financial Condition Data:
Cash and cash equivalents	$	8,871		$	13,646		$	12,814
Securities available for sale		103,026			90,460			90,023
Securities held to maturity		67,717			75,232			48,856
FHLB Stock		3,227			3,195			2,420
Loans receivable:
Loans receivable, gross		460,476			451,242			439,656
Allowance for loan losses		(6,920	)		(7,249	)		(5,166	)
Other, net		(437	)		(441	)		(387	)
Loans receivable, net		453,119			443,552			434,103

Loans held for sale		660			1,018			394
Other assets		27,224			22,518			23,206
Total assets	$	663,844		$	649,621		$	611,816


Total deposits	$	529,930		$	514,612		$	506,531
Other borrowings		54,600			53,900			36,900
Subordinated debentures		7,217			7,217			7,217
Securities sold under agreements to repurchase		15,396			16,019			15,160
Other liabilities		3,190			3,801			3,212
Stockholders' equity		53,511			54,072			42,796
Total liabilities and stockholders' equity	$	663,844		$	649,621		$	611,816

Book value per common share	$	7.50		$	7.60		$	7.31

Equity to assets		8.06	%		8.32	%		6.99	%

Asset Quality Data:
Nonaccrual loans	$	19,656		$	14,536		$	4,230
Loans past due 90 days or more and accruing		415			728			353
Restructured loans		2,846			2,417			1,855
Total nonperforming loans	$	22,917		$	17,681		$	6,438

Non-performing loans to total loans		4.98	%		3.92	%		1.46	%
Non-performing loans to total assets		3.45	%		2.72	%		1.05	%
Allowance for loan losses to nonperforming loans		30.20	%		41.00	%		80.24	%
Allowance for loan losses to total gross loans		1.50	%		1.61	%		1.18	%

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)

(unaudited)

	For the three months ended						For the year ended
	December 31,						December 31,
	2009			2008			2009			2008
Selected Operating Data:
Interest income	$	8,531		$	8,797		$	34,156		$	35,074
Interest expense		2,580			3,022			10,811			12,771
Net interest and dividend income		5,951			5,775			23,345			22,303
Provision for loan losses		1,200			2,050			3,575			3,585
Net interest and dividend income
after provision for loan losses		4,751			3,725			19,770			18,718

Noninterest income:
Fees and service charges		485			266			1,847			1,333
Bank owned life insurance		84			82			322			326
Gain on sales of mortgage loans		22			37			294			193
Gain on calls and sales of securities		3			42			258			103
Merchant processing		-			347			118			1,417
Gain on sale of merchant portfolio		-			509			-			509
Other		62			47			294			336
Total noninterest income		656			1,330			3,133			4,217

Noninterest expenses:
Salaries and employee benefits		2,000			2,051			8,264			8,129
Occupancy, net		460			448			1,858			1,802
Equipment		292			285			1,087			1,127
Data processing		336			312			1,218			1,209
FDIC insurance premium		238			94			1,124			317
Charitable contributions		208			153			619			627
Merchant processing		-			314			108			1,258
Other		818			926			3,512			3,517
Total noninterest expenses		4,352			4,583			17,790			17,986
Income before income tax expense		1,055			472			5,113			4,949
Income tax expense		281			49			1,479			1,448
Net income		774			423			3,634			3,501
Dividends on preferred stock and accretion		137			-			504			-
Net income available to common stockholders	$	637		$	423		$	3,130		$	3,501

Weighted avg. no. of diluted common shares		5,838,262			5,854,713			5,838,262			5,865,126
Diluted earnings per common share	$	0.11		$	0.07		$	0.54		$	0.60

Return on average common equity		4.64	%		3.99	%		5.92	%		8.34	%

Return on average assets		0.47	%		0.28	%		0.57	%		0.58	%

Yield on average interest-earning assets		5.52	%		6.06	%		5.65	%		6.23	%
Cost of average interest-bearing liabilities		2.06	%		2.57	%		2.20	%		2.80	%
Net interest rate spread		3.46	%		3.49	%		3.45	%		3.43	%

Net interest margin		3.88	%		3.99	%		3.89	%		4.00	%

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