Stewardship Financial Corporation Reports Earnings for the Quarter Ended March 31, 2009

 | Source: Stewardship Financial Corporation Stewardship Financial Corporation

MIDLAND PARK, NJ--(Marketwire - April 27, 2009) - Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, reported net income for the first quarter ended March 31, 2009 of $1.2 million, or $0.20 per diluted common share, as compared to net income of $1.1 million, or $0.19 per diluted common share, for the three months ended March 31, 2008. All per share calculations have been adjusted for a 5% stock dividend paid in November 2008.

Net interest income was $5.6 million for the three months ended March 31, 2009, reflecting an 8.4% increase over the $5.2 million recorded for the comparable prior year period.

The current period yield on earning assets of 5.81%, when compared to an earning asset yield of 6.52% for the three months ended March 31, 2008, reflects the effect of the current period lower interest rate environment. Our cost of interest bearing liabilities has declined to 2.39% for the three months ended March 31, 2009 as compared to 3.29% reported for the same prior year period, reflecting lower rates paid on our customer accounts, consistent with the lower interest rate environment. Despite this difficult operating environment, the net interest spread and margin for the three months ended March 31, 2009 of 3.42% and 3.87%, respectively, are comparable to the net interest spread and margin of 3.23% and 3.94%, respectively, for the three months ended March 31, 2008.

The Corporation recorded a $150,000 provision for loan losses for the three months ended March 31, 2009 compared to a provision for loan losses of $100,000 for the March 2008 period. Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer, commented, "Actively monitoring the performance of our loan portfolio is assisting us in detecting credit concerns and enabling us to appropriately manage delinquencies."

As previously reported, on December 31, 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 three months ended March 31, 2009.

Total assets at March 31, 2009 were $649.0 million, reflecting total asset growth of $37.2 million, or 6.1%, when compared to December 31, 2008. A $38.5 million increase in the securities available for sale and held to maturity portfolios reflect the investment and leveraging of the $10 million of preferred stock issued under the Capital Purchase Program. The leveraging strategy employed the purchasing of mortgage-backed securities. The principal and interest payments from these securities will be utilized to fund loan originations. After adjusting for the sale of participations in certain loans to other financial institutions, loans receivable were relatively unchanged from December 31, 2008.

Deposits totaled $515.5 million at March 31, 2009, compared to $506.5 million at December 31, 2008. The introduction of our new Power Rate checking product in mid-February contributed to the growth in deposits. This new offering 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.

A $13.6 million increase in other borrowings reflects funds utilized to accomplish the leveraging of the $10 million of Capital Purchase Program funds.

Total stockholders' equity at March 31, 2009 of $53.6 million includes the increase from the $10 million received on January 30, 2009 under the Capital Purchase Program (CPP). Van Ostenbridge stated, "The CPP was designed by the Treasury to provide additional capital to only healthy, well managed financial institutions, such as our Corporation. The $10 million, for which we issued equity securities under the CPP, has solidified our already well capitalized position." Van Ostenbridge added, "The increase in our base of capital further enhances our ability to continue to grow assets and increases our ability to make new loans -- better serving the lending needs of consumers and businesses in our market."

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 $6.3 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)


                                       March 31,  December 31,   March 31,
                                         2009         2008         2008
                                       ---------  -------------  ---------

Selected Financial Condition Data:
  Cash and cash equivalents            $  11,820  $      12,814  $  16,533
  Securities available for sale          106,577         90,023     88,242
  Securities held to maturity             70,842         48,856     37,410
  FHLB Stock                               3,032          2,420      2,558
  Loans receivable:
    Loans receivable, gross              437,196        439,656    425,791
    Allowance for loan losses             (5,324)        (5,166)    (4,571)
    Other, net                              (405)          (387)      (434)
                                       ---------  -------------  ---------
  Loans receivable, net                  431,467        434,103    420,786

  Loans held for sale                      1,968            394      2,246
  Other assets                            23,310         23,206     22,458
                                       ---------  -------------  ---------
  Total assets                         $ 649,016  $     611,816  $ 590,233
                                       =========  =============  =========

  Total deposits                       $ 515,470  $     506,531  $ 476,567
  Other borrowings                        50,500         36,900     41,425
  Subordinated debentures                  7,217          7,217      7,217
  Securities sold under agreements to
   repurchase                             15,162         15,160     16,508
  Other liabilities                        7,087          3,212      6,378
  Stockholders' equity                    53,580         42,796     42,138
                                       ---------  -------------  ---------
  Total liabilities and stockholders'
   equity                              $ 649,016  $     611,816  $ 590,233
                                       =========  =============  =========

  Book value per common share          $    7.90  $        7.70  $    7.55

  Equity to assets                          8.26%          6.99%      7.14%

Asset Quality Data:
  Nonaccrual loans                     $   6,592  $       4,230  $     360
  Loans past due 90 days or more and
   accruing                                  414            353        703
  Restructured loans                       2,375          1,855          -
                                       ---------  -------------  ---------
  Total nonperforming loans            $   9,381  $       6,438  $   1,063
                                       =========  =============  =========

  Non-performing loans to total loans       2.15%          1.46%      0.25%
  Non-performing loans to total assets      1.45%          1.05%      0.18%
  Allowance for loan losses to
   nonperforming loans                     56.75%         80.24%    430.01%
  Allowance for loan losses to total
   gross loans                              1.22%          1.18%      1.07%

All share data has been restated to include the effects of a 5% stock
dividend paid in November 2008.





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


                                                For the three months ended
                                                        March 31,
                                                --------------------------
                                                    2009          2008
                                                ------------  ------------
Selected Operating Data:
  Interest income                               $      8,473  $      8,657
  Interest expense                                     2,875         3,495
                                                ------------  ------------
    Net interest and dividend income                   5,598         5,162
  Provision for loan losses                              150           100
                                                ------------  ------------
  Net interest and dividend income after
   provision for loan losses                           5,448         5,062
  Non-interest income:
    Fees and service charges                             396           295
    Bank owned life insurance                             83            81
    Gain on sales of mortgage loans                       11            55
    Gain on calls and sales of securities                 39            41
    Merchant processing                                  118           369
    Other                                                 60           135
                                                ------------  ------------
    Total non-interest income                            707           976
  Non-interest expenses:
    Salaries and employee benefits                     2,059         2,016
    Occupancy, net                                       472           449
    Equipment                                            265           273
    Data processing                                      305           308
    Advertising                                           83           104
    FDIC insurance premium                               170            73
    Charitable contributions                             171           162
    Merchant processing                                  108           325
    Other                                                775           769
                                                ------------  ------------
    Total non-interest expenses                        4,408         4,479
                                                ------------  ------------
Income before income taxes                             1,747         1,559
Income tax expense                                       560           498
                                                ------------  ------------
Net income                                             1,187         1,061
Dividends on preferred stock                              84             -
                                                ------------  ------------
Net income available to common stockholders     $      1,103  $      1,061
                                                ============  ============

Weighted avg. no. of diluted common shares         5,557,098     5,591,517
Diluted earnings per common share               $       0.20  $       0.19

Return on average common equity                        10.48%        10.30%

Return on average assets                                0.76%         0.74%

Yield on average interest-earning assets                5.81%         6.52%
Cost of average interest-bearing liabilities            2.39%         3.29%
                                                ------------  ------------
Net interest rate spread                                3.42%         3.23%
                                                ============  ============

Net interest margin                                     3.87%         3.94%

All share data has been restated to include the effects of a 5% stock
dividend paid in November 2008.

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

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