Stewardship Financial Corporation Reports Earnings for the Year Ended December 31, 2010

MIDLAND PARK, NJ--(Marketwire - February 14, 2011) - Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, reported net income for the year ended December 31, 2010 of $1.2 million, or $0.12 per diluted common share, compared to net income of $3.6 million, or $0.54 per diluted common share, for the year ended December 31, 2009. For the three months ended December 31, 2010 net income was $1.1 million, or $0.16 per diluted common share, compared to net income of $774,000, or $0.11 per diluted common share, for the same prior year period. After dividends on preferred stock, the net income to the common shareholders was $683,000 for 2010 compared to net income of $3.1 million for 2009. The earnings in the current year periods reflect stable net interest income, improved noninterest income and controlled noninterest expense but a higher provision for loan losses.

Although the level of nonperforming loans posed a considerable challenge with a substantial impact on the Corporation's results for 2010, "some improvement was seen in the past quarter, with a 7.6% decline in nonperforming loans," reported Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer. Nonperforming loans were $22.6 million at December 31, 2010, a decline of $1.9 million from $24.5 million at September 30, 2010. Nonperforming loans represented 5.01% of total loans at year end, an improvement from 5.43% just three months earlier and 5.88% at June 30, 2010. Van Ostenbridge continued, "Our efforts have resulted in a positive trending in nonperforming loans."

For the three months ended December 31, 2010 the Corporation recorded a $1.8 million provision for loan losses, or $9.6 million on a year to date basis. Total allowance for loan losses at December 31, 2010 represented 1.88% of total loans compared to a ratio of 1.50% a year earlier. In addition, at December 31, 2010 the ratio of allowance for loans losses to nonperforming loans of 37.52% reflected consistent allowance coverage when compared to a level of 38.09% as of September 30, 2010 and an improvement from the level of 30.20% at December 31, 2009.

The Corporation reported net interest income for the year ended December 31, 2010 of $24.2 million, representing an increase of 3.7% over the comparable prior year amount. As a result of the effects of nonperforming loans and a decline in investment portfolio yields, the total asset yield declined. Nevertheless, both net interest income and the net interest margin remained strong during 2010 as the Corporation was able to mitigate the lower asset yields by management and reduction in liability costs through proactive deposit pricing. The reported net interest spread and margin for the year ended December 31, 2010 of 3.57% and 3.89%, respectively, were relatively comparable to the net interest spread and margin of 3.45% and 3.89%, respectively, for the prior year.

Noninterest income for the fourth quarter of 2010 includes a $279,000 gain realized on sale of available for sale securities conducted to reduce certain extension risk in the portfolio. In addition, noninterest income included an increase in gains from the sale of mortgage loans. The Corporation experienced an increase in mortgage loan refinance activity due to the Corporation's promotion of a 'no cost closing' program and the lower rate environment in the latter half of 2010. This activity allowed the Corporation to sell a larger volume of mortgages into the secondary market.

Despite increased costs associated with reducing the level of our problem assets, including legal fees, the Corporation's commitment to controlling noninterest expense continues. Expenses incurred for the year ended December 31, 2010 were slightly below the 2009 level.

Total assets of $688.1 million at December 31, 2010 showed a modest 3.7% growth rate when compared to $663.8 million of assets at December 31, 2009. Our commitment to our market remains unchanged, but we remain aware of the challenges that exist, as our customers continue to be cautious in their borrowing needs.

Deposit growth for 2010 was strong, with deposits increasing $45.7 million and totaling $575.6 million at December 31, 2010. The increase in deposits enabled the Corporation to reduce other borrowings by $18.6 million since December 31, 2009.

Capital levels, as well, remained strong, with a tier 1 leverage ratio of 8.58% and total risk based capital ratio of 13.45%, far exceeding the regulatory requirements for a "well capitalized" institution.

Van Ostenbridge summarized, "During 2010, we showed a reduction in our level of nonperforming loans while maintaining strong regulatory capital levels. We acknowledge that our results continue to be influenced by the loan loss provision, but we remain committed to addressing the workout of problematic loans in 2011."

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 is currently celebrating its twenty-fifth year of operation. To date, the Bank's total tithe donations exceed $7.3 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.

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



                                    December 31, September 30, December 31,
                                        2010         2010          2009
                                    -----------  ------------  -----------

Selected Financial Condition Data:
  Cash and cash equivalents         $    19,983  $     25,158  $     8,871
  Securities available for sale         138,628       127,348      103,026
  Securities held to maturity            45,394        47,434       67,717
  FHLB Stock                              2,497         2,497        3,227
  Loans receivable:
    Loans receivable, gross             451,867       450,507      460,476
    Allowance for loan losses            (8,490)       (9,327)      (6,920)
    Other, net                             (132)         (290)        (437)
                                    -----------  ------------  -----------
  Loans receivable, net                 443,245       440,890      453,119

  Loans held for sale                     9,818         9,326          660
  Other assets                           28,553        27,409       27,224
                                    -----------  ------------  -----------
  Total assets                      $   688,118  $    680,062  $   663,844
                                    ===========  ============  ===========

  Deposits:
  Total deposits                    $   575,603  $    565,845  $   529,930
  Other borrowings                       36,000        36,000       54,600
  Subordinated debentures                 7,217         7,217        7,217
  Securities sold under agreements
   to repurchase                         14,642        15,241       15,396
  Other liabilities                       2,524         2,910        3,190
  Stockholders' equity                   52,132        52,849       53,511
                                    -----------  ------------  -----------
  Total liabilities and
   stockholders' equity             $   688,118  $    680,062  $   663,844
                                    ===========  ============  ===========

  Book value per common share       $      7.24  $       7.37  $      7.50

  Equity to assets                         7.58%         7.77%        8.06%

Asset Quality Data:
  Nonaccrual loans                  $    22,500  $     24,334  $    19,656
  Loans past due 90 days or more
   and accruing                               -            10          415
  Restructured loans                        130           140        2,846
                                    -----------  ------------  -----------
  Total nonperforming loans              22,630        24,484       22,917
  Other real estate owned                   615           356            -
                                    -----------  ------------  -----------
  Total nonperforming assets        $    23,245  $     24,840  $    22,917
                                    ===========  ============  ===========


  Non-performing loans to total
   loans                                   5.01%         5.43%        4.98%
  Non-performing assets to total
   assets                                  3.38%         3.65%        3.45%
  Allowance for loan losses to
   nonperforming loans                    37.52%        38.09%       30.20%
  Allowance for loan losses to
   total gross loans                       1.88%         2.07%        1.50%




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


                                For the three months      For the year
                                        ended                ended
                                    December 31,          December 31,
                                --------------------  --------------------
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------
Selected Operating Data:
  Interest income               $   8,193  $   8,531  $  32,984  $  34,156
  Interest expense                  2,039      2,580      8,778     10,811
                                ---------  ---------  ---------  ---------
    Net interest income             6,154      5,951     24,206     23,345
  Provision for loan losses         1,820      1,200      9,575      3,575
                                ---------  ---------  ---------  ---------
  Net interest income after
   provision for loan losses        4,334      4,751     14,631     19,770
  Noninterest income:
    Fees and service charges          504        485      1,990      1,847
    Bank owned life insurance          82         84        331        322
    Gain on sales of mortgage
     loans                            456         22        671        294
    Gain on calls and sales of
     securities                       279          3      1,081        258
    Merchant processing                 -          -          -        118
    Other                              49         62        314        294
                                ---------  ---------  ---------  ---------
    Total noninterest income        1,370        656      4,387      3,133
  Noninterest expenses:
    Salaries and employee
     benefits                       2,180      2,000      8,331      8,264
    Occupancy, net                    483        460      1,954      1,858
    Equipment                         258        292      1,129      1,087
    Data processing                   336        336      1,322      1,218
    FDIC insurance premium            264        238        976      1,124
    Charitable contributions           60        208        360        619
    Merchant processing                 -          -          -        108
    Other                           1,166        818      3,878      3,512
                                ---------  ---------  ---------  ---------
    Total noninterest expenses      4,747      4,352     17,950     17,790
                                ---------  ---------  ---------  ---------
   Income before income taxes         957      1,055      1,068      5,113
   Income tax (benefit) expense      (130)       281       (165)     1,479
                                ---------  ---------  ---------  ---------
   Net income                       1,087        774      1,233      3,634
   Dividends on preferred stock
    and accretion                     138        137        550        504
                                ---------  ---------  ---------  ---------
   Net income available to
    common stockholders         $     949  $     637  $     683  $   3,130
                                =========  =========  =========  =========

   Weighted avg. no. of diluted
    common shares               5,845,952  5,838,262  5,843,756  5,836,739
   Diluted earnings per common
    share                       $    0.16  $    0.11  $    0.12  $    0.54

   Return on average common
    equity                           7.07%      4.64%      1.27%      5.92%

   Return on average assets          0.62%      0.47%      0.18%      0.57%

   Yield on average
    interest-earning assets          5.13%      5.52%      5.27%      5.65%
   Cost of average
    interest-bearing
    liabilities                      1.52%      2.06%      1.70%      2.20%
                                ---------  ---------  ---------  ---------
   Net interest rate spread          3.61%      3.46%      3.57%      3.45%
                                =========  =========  =========  =========

   Net interest margin               3.87%      3.88%      3.89%      3.89%

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