MIDLAND PARK, NJ -- (Marketwire) -- 11/09/12 -- Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, reported net income for the three and nine months ended September 30, 2012 of $328,000 and $780,000, respectively, compared to $578,000 and $1,646,000 for the corresponding three and nine month periods in 2011. After dividends on preferred stock and accretion, net income available to common shareholders for the current nine month period was $555,000, or $0.09 per diluted common share, compared to $1.1 million, or $0.19 per diluted common share, for the nine months ended September 30, 2011.

For the three and nine months ended September 30, 2012, the Corporation recorded provision for loan losses of $2.0 million and $6.7 million, respectively. These amounts compare to $2.3 million and $5.9 million for the same periods in 2011. "While the provision remains elevated," Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer noted, "nonperforming loans are beginning to show a decline." At September 30, 2012, nonperforming loans totaled $25.0 million, or 4.10% of total assets, representing a $4.7 million decline from $29.7 million, or 4.53% of total assets, at June 30, 2012. This decrease reflects payments and payoffs received as well as the transfer of certain loans to Other Real Estate Owned. "Other Real Estate Owned reflected an increase of $994,000 from June, however, we continue to have success in disposing of the properties quickly and the majority of properties currently held are under contract for sale," Van Ostenbridge commented.

The Corporation constantly monitors the loan portfolio and intends to continue to provide for loan loss reserves as appropriate based on ongoing reviews of the loan portfolio and general market conditions. As a measurement of the current allowance coverage, the total allowance for loan losses was 2.88% of total loans compared to a ratio of 2.54% at December 31, 2011. Likewise, at September 30, 2012 the allowance for loan losses represented 50.32% of nonperforming loans compared to 41.84% at December 31, 2011.

The Corporation reported net interest income of $5.9 million and $17.9 million for the three and nine months ended September 30, 2012, compared to $6.3 million and $18.5 million for the equivalent prior year periods. The net interest margin for the current three and nine months ended September 30, 2012 of 3.62% and 3.67%, respectively, compared to 3.87% and 3.86% for the three and nine months ended September 30, 2011, respectively. Asset yields continue to be impacted by the prolonged, low interest rate environment and the impact of nonaccruals. As such, the Corporation strives to offset some of the declines in yields on assets by managing funding costs. In addition to reducing rates offered on deposit products, during the current quarter the Corporation prepaid $7.0 million of a higher costing $14.0 million wholesale repurchase agreement.

For the three and nine months ended September 30, 2012, noninterest income was $1.7 million and $4.2 million, respectively, compared to $1.4 million and $3.4 million for the corresponding prior year periods. The 2012 periods include increased gains realized from the sale of securities. The gain for the three months ended September 30, 2012 reflects a transaction executed to lower the Company's risk exposure to rising interest rates and deleverage the balance sheet through the partial prepayment of a higher costing wholesale repurchase agreement. A resulting gain was partially offset by a prepayment premium.

Noninterest expenses for the three and nine months ended September 30, 2012 were $5.2 million and $14.4 million, respectively, as compared to $4.6 million and $13.8 million for the prior year three and nine month periods. Included in noninterest expenses in the current year periods is a $691,000 prepayment premium incurred with the repayment of the above noted wholesale repurchase agreement.

At September 30, 2012 total assets were $683.8 million, or a decrease of $25.0 million when compared to assets of $708.8 million at December 31, 2011. In addition to the above noted deleveraging of the balance sheet, since December 31, 2011, gross loans receivable have decreased $18.4 million, reflecting a reduced demand for loans and our ongoing attention on quality credit underwriting.

Deposits were $583.4 million at September 30, 2012, compared to deposits of $593.6 million at December 31, 2011. Average core deposit balances continue to see growth. Noninterest-bearing deposits now total $125.1 million, or 21.4% of total deposits at September 30, 2012, up from $115.8 million, or 19.5% at December 31, 2011.

In conclusion, Van Ostenbridge stated, "We are encouraged by the improvement in asset quality. We, however, acknowledge that there is still more to accomplish. We recognize that the legal process can be long, difficult and expensive but we remain firmly committed to addressing further reductions in our level of nonperforming assets."

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. To date, the Bank's tithe donations total $7.7 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)

                      September 30,   June 30,   December 31, September 30,
                           2012         2012         2011          2011
                      ------------- ------------ ------------ -------------

Selected Financial
 Condition Data:
  Cash and cash
   equivalents        $      17,387 $     25,340 $     13,698 $      23,736
  Securities
   available for sale       173,999      172,712      170,925       163,092
  Securities held to
   maturity                  31,890       32,993       38,354        39,937
  FHLB Stock                  2,213        2,213        2,478         2,491
  Loans receivable:
    Loans receivable,
     gross                  437,999      445,267      456,413       460,518
    Allowance for
     loan losses            (12,598)     (11,934)     (11,604)      (12,389)
    Other, net                   93           45           (6)          (74)
                      ------------- ------------ ------------ -------------
  Loans receivable,
   net                      425,494      433,378      444,803       448,055

  Loans held for sale           938        3,334        4,711         1,152
  Other assets               31,891       30,158       33,849        27,781
                      ------------- ------------ ------------ -------------
  Total assets        $     683,812 $    700,128 $    708,818 $     706,244
                      ============= ============ ============ =============


  Noninterest-bearing
   deposits           $     125,060 $    124,017 $    115,776 $     118,117
  Interest-bearing
   deposits                 458,366      469,478      477,776       469,747
                      ------------- ------------ ------------ -------------
  Total deposits            583,426      593,495      593,552       587,864
  Other borrowings           25,000       25,000       32,700        33,000
  Securities sold
   under agreements
   to repurchase              7,342       14,342       14,342        15,191
  Subordinated
   debentures                 7,217        7,217        7,217         7,217
  Other liabilities           2,953        2,183        3,215         3,420
  Stockholders'
   equity                    57,874       57,891       57,792        59,552
                      ------------- ------------ ------------ -------------
  Total liabilities
   and stockholders'
   equity             $     683,812 $    700,128 $    708,818 $     706,244
                      ============= ============ ============ =============

  Book value per
   common share       $        7.25 $       7.27 $       7.28 $        7.59

  Equity to assets             8.46%        8.27%        8.15%         8.43%

Asset Quality Data:
  Nonaccrual loans    $      24,960 $     29,541 $     27,736 $      24,422
  Loans past due 90
   days or more and
   accruing                      75          200            -         2,589
                      ------------- ------------ ------------ -------------
  Total nonperforming
   loans                     25,035       29,741       27,736        27,011
  Other real estate
   owned                      2,985        1,991        5,288           434
                      ------------- ------------ ------------ -------------
  Total nonperforming
   assets             $      28,020 $     31,732 $     33,024 $      27,445
                      ============= ============ ============ =============


  Nonperforming loans
   to total loans              5.72%        6.68%        6.08%         5.87%
  Nonperforming
   assets to total
   assets                      4.10%        4.53%        4.66%         3.89%
  Allowance for loan
   losses to
   nonperforming
   loans                      50.32%       40.13%       41.84%        45.87%
  Allowance for loan
   losses to total
   gross loans                 2.88%        2.68%        2.54%         2.69%


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

                              For the three months     For the nine months
                                      ended                   ended
                                  September 30,           September 30,
                             ----------------------  ----------------------
                                2012        2011        2012        2011
                             ----------  ----------  ----------  ----------
Selected Operating Data:
  Interest income            $    7,120  $    8,018  $   21,953  $   23,826
  Interest expense                1,259       1,732       4,081       5,370
                             ----------  ----------  ----------  ----------
    Net interest and
     dividend income              5,861       6,286      17,872      18,456
  Provision for loan losses       2,000       2,330       6,665       5,920
                             ----------  ----------  ----------  ----------
  Net interest and dividend
   income after provision
   for loan losses                3,861       3,956      11,207      12,536
  Noninterest income:
    Fees and service charges        496         501       1,542       1,550
    Bank owned life
     insurance                       83          83         244         244
    Gain on calls and sales
     of securities                  891         454       1,336         475
    Gain on sales of
     mortgage loans                 162         245         727         835
    Other                            87          67         331         273
                             ----------  ----------  ----------  ----------
    Total noninterest income      1,719       1,350       4,180       3,377
  Noninterest expenses:
    Salaries and employee
     benefits                     2,394       2,380       7,037       6,877
    Occupancy, net                  494         516       1,452       1,536
    Equipment                       240         235         731         731
    Data processing                 324         335         974       1,010
    FDIC insurance premium          154         152         457         553
    Other                         1,600         997       3,763       3,128
                             ----------  ----------  ----------  ----------
    Total noninterest
     expenses                     5,206       4,615      14,414      13,835
                             ----------  ----------  ----------  ----------
Income before income tax
 expense                            374         691         973       2,078
Income tax expense                   46         113         193         432
                             ----------  ----------  ----------  ----------
Net income                          328         578         780       1,646
Dividends on preferred stock
 and accretion                      112         244         225         520
                             ----------  ----------  ----------  ----------
Net income available to
 common stockholders         $      216  $      334  $      555  $    1,126
                             ==========  ==========  ==========  ==========

Weighted avg. no. of diluted
 common shares                5,916,123   5,866,575   5,903,598   5,855,663
Diluted earnings per common
 share                       $     0.04  $     0.06  $     0.09  $     0.19

Return on average common
 equity                            1.97%       2.35%       1.70%       2.78%

Return on average assets           0.19%       0.32%       0.15%       0.32%

Yield on average interest-
 earning assets                    4.37%       4.91%       4.49%       4.96%
Cost of average interest-
 bearing liabilities               0.97%       1.30%       1.04%       1.35%
                             ----------  ----------  ----------  ----------
Net interest rate spread           3.40%       3.61%       3.45%       3.61%
                             ==========  ==========  ==========  ==========

Net interest margin                3.62%       3.87%       3.67%       3.86%