8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported)        May 3, 2010

Stewardship Financial Corporation

(Exact Name of Registrant as Specified in its Charter)

New Jersey	0-21855	22-3351447
(State or Other Jurisdiction of	(Commission	(IRS Employer
Incorporation)	File Number)	Identification No.)
630 Godwin Avenue, Midland Park,  NJ		07432
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code (201)  444-7100

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17CFR230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition

On May 3, 2010, Stewardship Financial Corporation (the "Corporation") issued a press release, furnished as Exhibit 99.1 and incorporated in this Item 2.02 by reference, announcing the Corporation’s financial results for the quarter ended March 31, 2010.

The information contained in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished, and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of Section 18. Furthermore, the information contained in this Current Report on Form 8-K, including Exhibit 99.1, shall not be incorporated by reference into any registration statement filed by the Corporation under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. The furnishing of the information in this Report is not intended to, and does not, constitute a determination or admission by the Corporation that the information in this Report is material or complete, or that investors should consider this information before making an investment decision with respect to any security of the Corporation.

Item 9.01.  Financial Statements and Exhibits

(d) The following exhibit is furnished pursuant to Item 2.02 and shall not be deemed to be “filed”:

Exhibit No.	Description
Exhibit 99.1	Press Release dated May 3, 2010

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:	May 4, 2010	Stewardship Financial Corporation
		/s/ Claire M. Chadwick
		Claire M. Chadwick
		Senior Vice President and
		Chief Financial Officer

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EX-99.1

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 First Quarter of 2010

Midland Park, NJ – May 3, 2010 – Stewardship Financial Corporation (NASDAQ:SSFN), parent of Atlantic Stewardship Bank, announced today its financial results for the first quarter ended March 31, 2010.  Net income for the three months ended March 31, 2010 was $871,000, or $0.13 per diluted common share, as compared to net income of $1.2 million, or $0.19 per diluted common share, for the three months ended March 31, 2009.  Results for the current year period include an increased provision for loan losses.  All per share calculations have been adjusted for a 5% stock dividend paid in November 2009.

“While our earnings were again impacted by the provision for loan losses,” said Paul Van Ostenbridge, Stewardship Financial Corporation’s President and Chief Executive Officer, “positives for the quarter included an increase in net interest income as well as an increase in fees and service charges, and effective management of noninterest expenses.”

Net interest income grew $581,000, or 10.4%, in the first quarter of 2010 compared to last year.  For the three months ended March, 31, 2010, the net interest spread and margin grew to 3.74% and 4.08%, respectively, from 3.42% and 3.87%, respectively, for the three months ended March 31, 2009.  The current period yield on earning assets of 5.58%, compared

Press Release - Midland Park NJ
Stewardship Financial Corporation continued	May 3, 2010

to an earning asset yield of 5.81% for the three months ended March 31, 2009, reflects the effect of a prolonged low interest rate environment.  More than offsetting the decline in the asset yield, the cost of interest-bearing liabilities declined to 1.84% for the three months ended March 31, 2010 as compared to 2.39% reported for the same prior year period, principally reflecting the repricing of deposits at lower rates, consistent with the lower interest rate environment.

The Corporation recorded a $1.55 million provision for loan losses for the three months ended March 31, 2010 compared to a provision for loan losses of $150,000 for the March 2009 period.  The total allowance for loan losses increased to 1.77% of total loans from a comparable ratio of 1.50% at December 31, 2009 and 1.22% at March 31, 2009, reflecting the continuing uncertain economic environment.

Commenting on the Corporation’s loan loss provision, Van Ostenbridge stated, “While the results of our reserve analysis process required us to increase the provision for loan losses, our team continues to work diligently to assertively address problem and potential problem loans.  We are making progress in working through these problem assets and the current difficult economic cycle.”  Van Ostenbridge continued, ”While additional problem loans emerged, we were encouraged by our ability during the current quarter to resolve several of the problem loans existing at December 31, 2009.”  Non-performing loans declined slightly to $22.3 million, or 4.83% of total loans at March 31, 2010, compared to $22.9 million, or 4.98% at December 31, 2009.

During the first quarter of 2010, the Corporation realized a $328,000 gain on sale of securities.  The security sale addressed the anticipated impact of rising interest rates and provided the Corporation with additional liquidity.  In addition, noninterest income included increased fees and service charges when compared to the same period last year.  This

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Press Release - Midland Park NJ
Stewardship Financial Corporation continued	May 3, 2010

increase is partially the result of higher debit card related income due to increased customer usage.

Effective expense management was demonstrated by only a slight increase in total noninterest expenses in comparison to the first quarter of 2009.

Total assets at March 31, 2010 were $662.2 million, relatively unchanged from assets of $663.8 million at December 31, 2009.  A $9.1 million decrease in the securities available for sale is primarily attributable to the sale of securities as discussed previously.  Loans receivable, gross increased $1.4 million from December 31, 2009, reflecting a sufficient level of demand offset by payoffs and normal principal amortization.  The Corporation adheres to appropriate underwriting standards to ensure the origination of quality loans.

Total deposits were $542.9 million at March 31, 2010, representing solid growth of $13.0 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, “During this challenging time for the banking industry, our philosophy has been, and continues to be, to manage the net interest margin without compromising asset quality or future earnings potential.  For the near term, the size and extent of our loan loss provisioning will remain the most important single factor in our earnings.  However, we believe that with stabilization in our credit quality and a rebound in overall economic activity, we are well positioned for future growth.”

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

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Press Release - Midland Park NJ
Stewardship Financial Corporation continued	May 3, 2010

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.

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Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
	March 31,			December 31,			March 31,
	2010			2009			2009
Selected Financial Condition Data:
Cash and cash equivalents	$	12,196		$	8,871		$	11,820
Securities available for sale		93,926			103,026			106,577
Securities held to maturity		70,758			67,717			70,842
FHLB Stock		2,390			3,227			3,032
Loans receivable:
Loans receivable, gross		461,877			460,476			437,196
Allowance for loan losses		(8,174	)		(6,920	)		(5,324	)
Other, net		(422	)		(437	)		(405	)
Loans receivable, net		453,281			453,119			431,467
Loans held for sale		2,724			660			1,968
Other assets		26,951			27,224			23,310
Total assets	$	662,226		$	663,844		$	649,016
Total deposits	$	542,930		$	529,930		$	515,470
Other borrowings		36,000			54,600			50,500
Subordinated debentures		7,217			7,217			7,217
Securities sold under agreements to repurchase		15,399			15,396			15,162
Other liabilities		6,677			3,190			7,087
Stockholders' equity		54,003			53,511			53,580
Total liabilities and stockholders' equity	$	662,226		$	663,844		$	649,016
Book value per common share	$	7.57		$	7.50		$	7.53
Equity to assets		8.15	%		8.06	%		8.26	%
Asset Quality Data:
Nonaccrual loans	$	19,525		$	19,656		$	6,592
Loans past due 90 days or more and accruing		-			415			414
Restructured loans		2,775			2,846			2,375
Total nonperforming loans	$	22,300		$	22,917		$	9,381
Non-performing loans to total loans		4.83	%		4.98	%		2.15	%
Non-performing loans to total assets		3.37	%		3.45	%		1.45	%
Allowance for loan losses to nonperforming loans		36.65	%		30.20	%		56.75	%
Allowance for loan losses to total gross loans		1.77	%		1.50	%		1.22	%
All share data has been restated to include the effects of a 5% stock dividend paid in November 2009.

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Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
	For the three months ended
	March 31,
	2010			2009
Selected Operating Data:
Interest income	$	8,495		$	8,473
Interest expense		2,316			2,875
Net interest and dividend income		6,179			5,598
Provision for loan losses		1,550			150
Net interest and dividend income
after provision for loan losses		4,629			5,448
Non-interest income:
Fees and service charges		469			396
Bank owned life insurance		86			83
Gain on sales of mortgage loans		55			11
Gain on calls and sales of securities		328			39
Merchant processing		-			118
Other		73			60
Total noninterest income		1,011			707
Non-interest expenses:
Salaries and employee benefits		2,126			2,059
Occupancy, net		489			472
Equipment		309			265
Data processing		325			305
FDIC insurance premium		224			170
Charitable contributions		165			171
Merchant processing		-			108
Other		786			858
Total noninterest expenses		4,424			4,408
Income before income taxes		1,216			1,747
Income tax expense		345			560
Net income		871			1,187
Dividends on preferred stock		137			84
Net income available to common stockholders	$	734		$	1,103
Weighted avg. no. of diluted common shares		5,841,633			5,834,953
Diluted earnings per common share	$	0.13		$	0.19
Return on average common equity		5.48	%		9.04	%
Return on average assets		0.54	%		0.76	%
Yield on average interest-earning assets		5.58	%		5.81	%
Cost of average interest-bearing liabilities		1.84	%		2.39	%
Net interest rate spread		3.74	%		3.42	%
Net interest margin		4.08	%		3.87	%
All share data has been restated to include the effects of a 5% stock dividend paid in November 2009.

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