Stewardship Financial Corporation Announces Improved

MIDLAND PARK, NJ--(Marketwired - May 10, 2016) - Stewardship Financial Corporation (NASDAQ: SSFN), parent company of Atlantic Stewardship Bank, announced net income available to common shareholders for the three months ended March 31, 2016 of $991,000, or $0.16 per common share, as compared to $746,000, or $0.12 per common share, for the three months ended March 31, 2015.

"The Corporation continues to demonstrate an ability to produce steadily improving results," stated Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer.

Operating Results
Net interest income was $5.3 million for the first quarter of 2016 compared to $5.4 million for the comparable period a year earlier. The net interest margin for the three months ended March 31, 2016 was 3.11% compared to 3.41% for the three months ended March 31, 2015. The current year decline in net interest rate margin partially reflects the impact of the $16.6 million of Subordinated Notes issued in August 2015 and the subsequent redemption of preferred stock. While the cost of the Subordinated Notes added $296,000 of interest expense to the current year period, such increase, on an after tax basis, 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 become fixed at 9%, ultimately making the issuance of the subordinated notes a positive impact to future net income available to common shareholders.

The Corporation reported noninterest income of $819,000 for the three months ended March 31, 2016 compared to $918,000 for the equivalent prior year period. Excluding gains from securities transactions and gains from the sale of other real estate owned, noninterest income for the current year period of $795,000 represents an $82,000 improvement when measured against a comparable figure of $713,000 for the three months ended March 31, 2015. Approximately $50,000 of the increase is reflected in fees and service charges.

Total noninterest expenses were $4.9 million for the three months ended March 31, 2016 -- relatively comparable to the $5.0 million incurred in the prior year period. "We are committed to controlling expenses as we grow our balance sheet," stated Van Ostenbridge.

Asset Quality
Results for the three months ended March 31, 2016 were positively impacted by the Corporation recording a negative provision for loan losses of $350,000 as compared to a negative provision for loan losses of $100,000 for the three months ended March 31, 2015. During the three months ended March 31, 2016, the Corporation recorded a $67,000 net recovery of previously charged off loan balances. In addition, both quantitative and qualitative factors evaluated in determining reserve levels continue to show improvement, thereby supporting a lower overall reserve level.

Balance Sheet / Financial Condition
Total assets at March 31, 2016 were $726.7 million, reflecting an increase from the $717.9 million of assets at December 31, 2015. While lower than recent quarters, the net impact of new loan originations, partially offset by normal principal amortization and payoffs, resulted in growth in the loan portfolio. To supplement the loan growth, funds were invested in securities, so as to contribute to the Corporation's overall yield on earning assets. According to Van Ostenbridge, "The Corporation intends to utilize cash flows from the securities portfolios to help fund future loan growth."

Total deposits were $612.4 million at March 31, 2016, reflecting net growth of $7.7 million since December 31, 2015. The Corporation continues to experience growth in both noninterest-bearing and interest-bearing deposits.

At March 31, 2016, the Corporation's Tier 1 and total risk based capital ratios were 10.28% and 14.45%, respectively. These ratios are both significantly above the respective 4.0% and 8% minimum levels required and result in categorizing the Corporation as a "well capitalized" institution under regulatory guidelines.

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 $8.8 million.

We invite you to visit our website at www.asbnow.com for additional information.

The information disclosed in this document contains cert ain "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)

			March 31,			December 31,			September 30,			June 30,			March 31,
			2016			2015			2015			2015			2015

Selected Financial Condition Data:
	Cash and cash equivalents		$	13,319		$	10,910		$	16,025		$	19,782		$	21,035
	Securities available for sale			97,637			93,354			86,994			90,850			94,553
	Securities held to maturity			62,427			60,738			60,252			58,363			55,811
	FHLB Stock			2,608			2,608			3,035			2,833			3,026
	Loans held for sale			783			1,522			1,570			1,416			798
	Loans receivable:
		Loans receivable, gross		528,011			526,477			518,168			507,105			490,087
		Allowance for loan losses		(8,540	)		(8,823	)		(8,805	)		(9,299	)		(9,600	)
		Other, net		(64	)		(98	)		(93	)		(132	)		(7	)
	Loans receivable, net			519,407			517,556			509,270			497,674			480,480
	Other real estate owned, net			1,013			880			587			219			320
	Bank owned life insurance			14,212			14,111			14,008			13,905			13,804
	Other assets			15,251			16,209			15,908			16,149			15,990
	Total assets		$	726,657		$	717,888		$	707,649		$	701,191		$	685,817


	Noninterest-bearing deposits		$	154,201		$	147,828		$	151,078		$	153,546		$	141,406
	Interest-bearing deposits			458,225			456,925			434,790			432,453			424,916
	Total deposits			612,426			604,753			585,868			585,999			566,322
	Other borrowings			40,000			40,000			49,500			45,000			50,000
	Subordinated debentures and subordinated notes			23,203			23,186			23,176			7,217			7,217
	Other liabilities			1,836			2,376			2,087			2,123			2,166
	Total liabilities			677,465			670,315			660,631			640,339			625,705
	Shareholders' equity			49,192			47,573			47,018			60,852			60,112
	Total liabilities and shareholders' equity		$	726,657		$	717,888		$	707,649		$	701,191		$	685,817

	Gross loans to deposits			86.22%			87.06%			88.44%			86.54%			86.54%

	Equity to assets			6.77%			6.63%			6.64%			8.68%			8.77%

	Book value per share		$	8.05		$	7.82		$	7.72		$	7.53		$	7.42

Asset Quality Data:
	Nonaccrual loans		$	2,304		$	1,882		$	2,574		$	2,539		$	2,798
	Loans past due 90 days or more and accruing			-			-			-			-			-
	Total nonperforming loans			2,304			1,882			2,574			2,539			2,798
	Other real estate owned			1,013			880			587			219			320
	Total nonperforming assets		$	3,317		$	2,762		$	3,161		$	2,758		$	3,118


	Nonperforming loans to total loans			0.44%			0.36%			0.50%			0.50%			0.57%
	Nonperforming assets to total assets			0.46%			0.38%			0.45%			0.39%			0.45%
	Allowance for loan losses to nonperforming loans			370.66%			468.81%			342.07%			366.25%			343.10%
	Allowance for loan losses to total gross loans			1.62%			1.68%			1.70%			1.83%			1.96%


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

			For the three months ended
			March 31,
			2016			2015
Selected Operating Data:
	Interest income		$	6,449		$	6,194
	Interest expense			1,173			793
		Net interest and dividend income		5,276			5,401
	Provision for loan losses			(350	)		(100	)
	Net interest income after provision for loan losses			5,626			5,501
	Noninterest income:
		Fees and service charges		529			479
		Bank owned life insurance		101			96
		Gain on calls and sales of securities		24			152
		Gain on sales of mortgage loans		18			10
		Gain on sales of other real estate owned		-			53
		Other		147			128
		Total noninterest income		819			918
	Noninterest expenses:
		Salaries and employee benefits		2,715			2,708
		Occupancy, net		398			467
		Equipment		150			156
		Data processing		472			453
		FDIC insurance premium		106			113
		Other		1,061			1,152
		Total noninterest expenses		4,902			5,049
Income before income tax expense				1,543			1,370
Income tax expense				552			453
Net income				991			917
Dividends on preferred stock				-			171
Net income available to common shareholders			$	991		$	746

Weighted avg. no. of diluted common shares				6,092,351			6,045,683
Diluted earnings per common share			$	0.16		$	0.12

Return on average common equity				8.21%			6.77%

Return on average assets				0.55%			0.54%

Yield on average interest-earning assets				3.79%			3.90%
Cost of average interest-bearing liabilities				0.90%			0.67%
Net interest rate spread				2.89%			3.23%

Net interest margin				3.11%			3.41%



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

			For the three months ended
			March 31,			December 31,			September 30,			June 30,			March 31,
			2016			2015			2015			2015			2015
Selected Operating Data:
	Interest income		$	6,449		$	6,643		$	6,412		$	6,360		$	6,194
	Interest expense			1,173			1,198			993			842			793
		Net interest and dividend income		5,276			5,445			5,419			5,518			5,401
	Provision for loan losses			(350	)		(275	)		(400	)		(600	)		(100	)
	Net interest and dividend income
		after provision for loan losses		5,626			5,720			5,819			6,118			5,501
	Noninterest income:
		Fees and service charges		529			558			541			557			479
		Bank owned life insurance		101			103			103			101			96
		Gain on calls and sales of securities		24			17			-			-			152
		Gain on sales of mortgage loans		18			24			52			55			10
		Gain on sales of other real estate owned		-			30			-			-			53
		Other		147			123			142			169			128
		Total noninterest income		819			855			838			882			918
	Noninterest expenses:
		Salaries and employee benefits		2,715			2,719			2,785			2,688			2,708
		Occupancy, net		398			422			427			423			467
		Equipment		150			159			175			165			156
		Data processing		472			467			468			459			453
		FDIC insurance premium		106			106			87			117			113
		Other		1,061			1,027			1,183			1,253			1,152
		Total noninterest expenses		4,902			4,900			5,125			5,105			5,049
Income before income tax expense				1,543			1,675			1,532			1,895			1,370
Income tax expense				552			614			532			673			453
Net income				991			1,061			1,000			1,222			917
Dividends on preferred stock				-			-			114			171			171
Net income available to common shareholders			$	991		$	1,061		$	886		$	1,051		$	746

Weighted avg. no. of diluted common shares				6,092,351			6,086,249			6,091,627			6,086,474			6,045,683
Diluted earnings per common share			$	0.16		$	0.17		$	0.15		$	0.17		$	0.12

Return on average common equity				8.21%			8.89%			7.58%			9.25%			6.77%

Return on average assets				0.55%			0.58%			0.56%			0.71%			0.54%

Yield on average interest-earning assets				3.79%			3.87%			3.80%			3.91%			3.90%
Cost of average interest-bearing liabilities				0.90%			0.92%			0.79%			0.70%			0.67%
Net interest rate spread				2.89%			2.95%			3.01%			3.21%			3.23%

Net interest margin				3.11%			3.18%			3.21%			3.40%			3.41%

Contact Information:

Contact:
Claire M. Chadwick
EVP and Chief Financial Officer
630 Godwin Avenue
Midland Park, NJ 07432
P: (201) 444-7100

Stewardship Financial Corporation Announces Improved Earnings for First Quarter of 2016