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) November 5, 2015

Stewardship Financial Corporation

(Exact Name of Registrant as Specified in its Charter)

New Jersey	1-33377	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):

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

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

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

o 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 November 5, 2015, 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 September 30, 2015.

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

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 November 5, 2015

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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:  November 5, 2015	Stewardship Financial Corporation
	/s/ Claire M. Chadwick
	Claire M. Chadwick
	Executive Vice President and
	Chief Financial Officer

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EX-99.1

EXHIBIT 99.1

Stewardship Financial Corporation Reports

Earnings for Third Quarter of 2015

Midland Park, NJ, November 5, 2015 – Stewardship Financial Corporation (NASDAQ:SSFN), parent company of Atlantic Stewardship Bank, reported net income for the three and nine months ended September 30, 2015, of $1.0 million and $3.1 million, respectively, compared to net income of $552,000 and $1.8 million for the equivalent three and nine month periods in 2014. After dividends on preferred stock, net income available to common shareholders for the current three month period was $886,000, or $0.15 per share, compared to $382,000, or $0.06 per share, for the three months ended September 30, 2014. For the first nine months of 2015, net income available to common shareholders was $2,683,000, or $0.44 per share, compared to $1,272,000, or $0.21 per share, during the same period in 2014.

“We are pleased to continue to report improving results. The stabilization of our asset quality and steady loan growth remain our focus and have contributed to our progress,” said Paul Van Ostenbridge, President and Chief Executive Officer of Stewardship Financial Corporation,

Balance Sheet / Financial Condition

Total assets at September 30, 2015 were $707.6 million – an increase when compared to with total assets of $693.6 million at December 31, 2014. For the first nine months of 2015, a $40.8 million net increase in gross loans receivable was the result of new loan originations, partially offset by normal principal amortization and payoffs. On an annualized basis, such loan growth equates to 11.4%. Partially offsetting the loan growth was the previously reported sale of approximately $27.8 million of available for sale securities with higher price volatility. Such sales were conducted to provide a portion of the funding for the loan growth, reflecting an intentional shift to higher yielding assets.

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Press Release - Midland Park NJ
Stewardship Financial Corporation continued	November 5, 2015

Total deposits were $585.9 million at September 30, 2015, reflecting a $29.4 million increase when compared to deposits of $556.5 million at December 31, 2014. “The focus on loan growth naturally warrants a continued focus on deposit growth”, noted Van Ostenbridge. As a result of an increase in deposits, other borrowings decreased $17.2 million to $49.5 million at September 30, 2015.

The increase in subordinated debentures and subordinated notes reflects the previously announced completion of a $16.6 million issuance of fixed rate subordinated notes on August 28, 2015. The subordinated notes have a maturity date of August 28, 2025 and bear interest at the rate of 6.75% per annum. Using the net proceeds of the subordinated note issuance, on September 1, 2015, the Corporation repurchased the $15.0 million of preferred stock, thus ending the Corporation’s participation in the U.S. Department of the Treasury’s Small Business Lending Fund program (“SBLF”).

While tier 1 capital was impacted by the replacement of preferred stock with subordinated debt, which is considered tier 2 capital, regulatory capital levels, at September 30, 2015, continue to exceed the capital requirements for a “well capitalized” institution. The Corporation’s tier 1 leverage ratio was 7.66% (4% requirement) and total risk based capital ratio was 14.48% (8% requirement).

Operating Results

For the three and nine months ended September 30, 2015, the Corporation reported net interest income of $5.4 million and $16.3 million, respectively, compared to $5.3 million and $16.0 million for the corresponding prior year periods. The net interest margin for the current three and nine months ended September 30, 2015 was 3.21% and 3.34%, respectively, compared to 3.36% and 3.42% for the three and nine months ended September 30, 2014, respectively. The recent decline in net interest rate margin partially reflects the impact of the $16.6 million of subordinated notes previously discussed. While the cost of the subordinated notes adds to interest expense, on an after tax basis, such increase is approximately offset by the dividends that would have accrued at a rate of 4.56% on the preferred stock resulting in an overall neutral effect on net income available to common shareholders. Furthermore, beginning on March 1, 2016, and for all dividend periods thereafter, the dividend rate on the preferred stock would have been increased and fixed at 9%, making the issuance of the subordinated notes a positive impact to net income available to common shareholders in the future.

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Press Release - Midland Park NJ
Stewardship Financial Corporation continued	November 5, 2015

Noninterest income for the three and nine months ended September 30, 2015 was $838,000 and $2.6 million, respectively, compared to $764,000 and $2.0 million for the same prior year periods. For the current year periods, fees and service charges reflect increases of $31,000 and $142,000 when compared to 2014. In addition, as a result of the Corporation returning to selling the majority of residential loan production, gains on sales of mortgage loans increased over the prior year three and nine month periods. For the nine months ended September 30 2015, noninterest income included gains of $152,000 from the sale of available for sale securities and $53,000 from the sale of other real estate owned. The prior year nine month period included a loss of $241,000 from the sale of nonperforming loans.

Noninterest expenses totaled $5.1 million and $15.3 million for the three and nine months ended September 30, 2015, relatively consistent with the $5.0 million and $15.2 million incurred for the three and nine months ended September 30, 2014, respectively.

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Press Release - Midland Park NJ
Stewardship Financial Corporation continued	November 5, 2015

Asset Quality

Van Ostenbridge stated, “The credit metrics of our assets have improved and stabilized.” For the three and nine months ended September 30, 2015, results continue to be positively impacted by the Corporation recording negative provisions for loan losses of $400,000 and $1.1 million, respectively. For the prior year, the Corporation recorded a $250,000 provision for loan losses for both the three and nine months ended September 30, 2014. Nonperforming loans were $2.6 million, or 0.50% of total loans at September 30, 2015 compared to $3.6 million, or 0.76%, at December 31, 2014. Total nonperforming assets of $3.2 million, which includes other real estate owned, represented 0.45% of total assets at September 30, 2015 compared to 0.71% at December 31, 2014.

About Stewardship Financial Corporation

Stewardship Financial Corporation’s subsidiary, the Atlantic Stewardship Bank, has 12 banking offices in Midland Park, Hawthorne (2), Montville, North Haledon, Pequannock, Ridgewood, Waldwick, Wayne (2), Westwood and Wyckoff, New Jersey. The bank is known for tithing 10% of its pre-tax profits to Christian and local charities. To date, the Bank’s tithe donations total $8.2 million.

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)

	September 30,			June 30,			March 31,			December 31,			September 30,
	2015			2015			2015			2014			2014
Selected Financial Condition Data:
Cash and cash equivalents	$	16,025		$	19,782		$	21,035		$	10,086		$	10,850
Securities available for sale		86,994			90,850			94,553			124,918			138,255
Securities held to maturity		60,252			58,363			55,811			55,097			54,234
FHLB Stock		3,035			2,833			3,026			3,777			2,882
Loans receivable:
Loans receivable, gross		518,168			507,105			490,087			477,320			443,006
Allowance for loan losses		(8,805	)		(9,299	)		(9,600	)		(9,602	)		(10,094	)
Other, net		(93	)		(132	)		(7	)		(19	)		(17	)
Loans receivable, net		509,270			497,674			480,480			467,699			432,895
Loans held for sale		1,570			1,416			798			—			364
Other assets		30,503			30,273			30,114			31,974			33,072
Total assets	$	707,649		$	701,191		$	685,817		$	693,551		$	672,552
Noninterest-bearing deposits	$	151,078		$	153,546		$	141,406		$	136,721		$	140,345
Interest-bearing deposits		434,790			432,453			424,916			419,755			416,666
Total deposits		585,868			585,999			566,322			556,476			557,011
Other borrowings		49,500			45,000			50,000			66,700			46,800
Securities sold under agreements to repurchase		—			—			—			—			100
Subordinated debentures and subordinated notes		23,176			7,217			7,217			7,217			7,217
Other liabilities		2,087			2,123			2,166			4,189			4,166
Total liabilities		660,631			640,339			625,705			634,582			615,294
Shareholders' equity		47,018			60,852			60,112			58,969			57,258
Total liabilities and shareholders' equity	$	707,649		$	701,191		$	685,817		$	693,551		$	672,552
Gross loans to deposits		88.44%			86.54%			86.54%			85.78%			79.53%
Equity to assets		6.64%			8.68%			8.77%			8.50%			8.51%
Asset Quality Data:
Nonaccrual loans	$	2,574		$	2,539		$	2,798		$	3,628		$	4,434
Loans past due 90 days or more and accruing		—			—			—			—			—
Total nonperforming loans		2,574			2,539			2,798			3,628			4,434
Other real estate owned		587			219			320			1,308			2,090
Total nonperforming assets	$	3,161		$	2,758		$	3,118		$	4,936		$	6,524
Nonperforming loans to total loans		0.50%			0.50%			0.57%			0.76%			1.00%
Nonperforming assets to total assets		0.45%			0.39%			0.45%			0.71%			0.97%
Allowance for loan losses to nonperforming loans		342.07%			366.25%			343.10%			264.66%			227.65%
Allowance for loan losses to total gross loans		1.70%			1.83%			1.96%			2.01%			2.28%

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Stewardship Financial Corporation

Selected Consolidated Financial Information

(dollars in thousands, except per share amounts)

(unaudited)

	For the three months ended					For the nine months ended
	September 30,					September 30,
	2015			2014		2015			2014
Selected Operating Data:
Interest income	$	6,412		$	6,069	$	18,966		$	18,400
Interest expense		993			791		2,628			2,440
Net interest and dividend income		5,419			5,278		16,338			15,960
Provision for loan losses		(400	)		250		(1,100	)		250
Net interest and dividend income
after provision for loan losses		5,819			5,028		17,438			15,710
Noninterest income:
Fees and service charges		541			510		1,577			1,435
Bank owned life insurance		103			100		300			302
Gain on calls and sales of securities		—			—		152			—
Gain on sales of mortgage loans		52			32		117			46
Loss on sales of loans		—			—		—			(241	)
Gain on sales of other real estate owned		—			—		53			54
Other		142			122		439			374
Total noninterest income		838			764		2,638			1,970
Noninterest expenses:
Salaries and employee benefits		2,785			2,624		8,181			7,859
Occupancy, net		427			439		1,317			1,514
Equipment		175			167		496			530
Data processing		468			433		1,380			1,255
FDIC insurance premium		87			133		317			477
Other		1,183			1,193		3,588			3,554
Total noninterest expenses		5,125			4,989		15,279			15,189
Income before income tax expense		1,532			803		4,797			2,491
Income tax expense		532			251		1,658			707
Net income		1,000			552		3,139			1,784
Dividends on preferred stock		114			170		456			512
Net income available to common shareholders	$	886		$	382	$	2,683		$	1,272
Weighted avg. no. of diluted common shares		6,091,627			6,026,848		6,074,763			5,994,800
Diluted earnings per common share	$	0.15		$	0.06	$	0.44		$	0.21
Return on average common equity		7.58%			3.58%		7.88%			4.14%
Return on average assets		0.56%			0.33%		0.60%			0.36%
Yield on average interest-earning assets		3.80%			3.85%		3.87%			3.94%
Cost of average interest-bearing liabilities		0.79%			0.68%		0.72%			0.69%
Net interest rate spread		3.01%			3.17%		3.15%			3.25%
Net interest margin		3.21%			3.36%		3.34%			3.42%

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Stewardship Financial Corporation

Selected Consolidated Financial Information

(dollars in thousands, except per share amounts)

(unaudited)

	For the three months ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2015			2015			2015			2014			2014
Selected Operating Data:
Interest income	$	6,412		$	6,360		$	6,194		$	6,534		$	6,069
Interest expense		993			842			793			767			791
Net interest and dividend income		5,419			5,518			5,401			5,767			5,278
Provision for loan losses		(400	)		(600	)		(100	)		(300	)		250
Net interest and dividend income
after provision for loan losses		5,819			6,118			5,501			6,067			5,028
Noninterest income:
Fees and service charges		541			557			479			568			510
Bank owned life insurance		103			101			96			103			100
Gain on calls and sales of securities		—			—			152			165			—
Gain on sales of mortgage loans		52			55			10			26			32
Loss on sales of loans		—			—			—			—			—
Gain on sales of other real estate owned		—			—			53			9			—
Other		142			169			128			119			122
Total noninterest income		838			882			918			990			764
Noninterest expenses:
Salaries and employee benefits		2,785			2,688			2,708			2,738			2,624
Occupancy, net		427			423			467			420			439
Equipment		175			165			156			157			167
Data processing		468			459			453			447			433
FDIC insurance premium		87			117			113			103			133
Other		1,183			1,253			1,152			1,179			1,193
Total noninterest expenses		5,125			5,105			5,049			5,044			4,989
Income before income tax expense		1,532			1,895			1,370			2,013			803
Income tax expense		532			673			453			712			251
Net income		1,000			1,222			917			1,301			552
Dividends on preferred stock		114			171			171			171			170
Net income available to common shareholders	$	886		$	1,051		$	746		$	1,130		$	382
Weighted avg. no. of diluted common shares		6,091,627			6,086,474			6,045,683			6,030,561			6,026,848
Diluted earnings per common share	$	0.15		$	0.17		$	0.12		$	0.19		$	0.06
Return on average common equity		7.58%			9.25%			6.77%			10.41%			3.58%
Return on average assets		0.56%			0.71%			0.54%			0.75%			0.33%
Yield on average interest-earning assets		3.80%			3.91%			3.90%			4.04%			3.85%
Cost of average interest-bearing liabilities		0.79%			0.70%			0.67%			0.64%			0.68%
Net interest rate spread		3.01%			3.21%			3.23%			3.40%			3.17%
Net interest margin		3.21%			3.40%			3.41%			3.57%			3.36%

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