|   | (X) | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|-----|---------------------------------------------------------------------------------------------------|

| Stewardship      Financial Corporation                         |
|----------------------------------------------------------------|
| (Exact      name of registrant as specified in its charter)    |
|                                                           |   |   |
| New      Jersey                                                |   | 22-3351447 |
| (State      or other jurisdiction of                           |   | (I.R.S.      Employer Identification No.) |
| incorporation      or organization)                            |   |   |
|                                                           |   |   |
| 630      Godwin Avenue, Midland Park,  NJ            |   | 07432 |
| (Address      of principal executive offices)                  |   | (Zip      Code) |
|                                                           |   |   |
| (201)  444-7100                                      |
| (Registrant’s      telephone number, including areacode) |

| Large      accelerated filer  ̈                                                  | Accelerated      filer  ̈               |
|--------------------------------------------------------------------------------------|---------------------------------------------|
| Non-accelerated      filer  ̈ (Do      not check if a smaller reporting company) | Smaller      reporting company  x |

----

D

|                                                                                                                                       |         |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------------|
|                                                                                                                                       | PAGE         |
|                                                                                                                                       | NUMBER       |
| PART      I  -  CONSOLIDATED FINANCIAL      INFORMATION                                                                |         |
|                                                                                                                                       |         |
| ITEM 1  -   CONSOLIDATED FINANCIAL      STATEMENTS                                                                |         |
|                                                                                                                                       |         |
| Consolidated Statements of Financial Condition at March 31,      2010 and December 31, 2009 (Unaudited)                                    | 1            |
|                                                                                                                                       |         |
| Consolidated Statements of Income for the Three Months ended      March 31, 2010 and 2009 (Unaudited)                                      | 2            |
|                                                                                                                                       |         |
| Consolidated Statement of Changes in Stockholders’ Equity for      the Three Months ended March 31, 2010 and 2009    (Unaudited)     | 3            |
|                                                                                                                                       |         |
| Consolidated Statements of Comprehensive Income for the Three      Months ended March 31, 2010 and 2009 (Unaudited)                        | 4            |
|                                                                                                                                       |         |
| Consolidated Statements of Cash Flows for the Three Months      ended March 31, 2010 and 2009 (Unaudited)                                  | 5 -      6   |
|                                                                                                                                       |         |
| Notes to Consolidated Financial Statements      (Unaudited)                                                                                | 7 -      17  |
|                                                                                                                                       |         |
| ITEM 2  -   MANAGEMENT’S DISCUSSION      AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS | 18      - 24 |
|                                                                                                                                       |         |
| ITEM 3 -   QUANTITATIVE AND QUALITATIVE      DISCLOSURE ABOUT MARKET RISK                                                   | 25           |
|                                                                                                                                       |         |
| ITEM 4 -    CONTROLS AND      PROCEDURES                                                                               | 25           |
|                                                                                                                                       |         |
| PART      II  -  OTHER INFORMATION                                                                                     |         |
|                                                                                                                                       |         |
| ITEM 6    -     EXHIBITS                                                                                          | 26           |
|                                                                                                                                       |         |
| SIGNATURES                                                                                                                                 | 27           |
|                                                                                                                                       |         |
| EXHIBIT      INDEX                                                                                                                         | 28           |
|                                                                                                                                       |         |

----

Index

| Stewardship Financial Corporation and SubsidiaryConsolidated Statements of Financial Condition(Unaudited) |
|-----------------------------------------------------------------------------------------------------------|
|                                                                                                      |   |   |   |   |

|                                                                                              |   | March      31, |        |   | December      31, |   |
|---------------------------------------------------------------------------------------------------|--------|----------------|-------------|--------|-------------------|--------|
|                                                                                              |   | 2010           |        |   | 2009              |   |
| Assets                                                                                            |   |           |        |   |              |   |
|                                                                                              |   |           |        |   |              |   |
| Cash      and due from banks                                                                      |   | $              | 11,918,000  |   |              | $      | 8,840,000 |   |
| Other      interest-earning assets                                                                |   |           | 278,000     |   |              |   | 31,000 |   |
|        Cash      and cash equivalents                          |   |           | 12,196,000  |   |              |   | 8,871,000 |   |
|                                                                                              |   |           |        |   |              |   |   |   |
| Securities      available for sale                                                                |   |           | 93,926,000  |   |              |   | 103,026,000 |   |
| Securities      held to maturity; estimated fair value of $72,611,000 (2010)      and             |   |           |        |   |              |   |   |   |
|     $68,765,000      (2009)                                                   |   |           | 70,758,000  |   |              |   | 67,717,000 |   |
| FHLB-NY      stock, at cost                                                                       |   |           | 2,390,000   |   |              |   | 3,227,000 |   |
| Loans,      net of allowance for loan losses of $8,174,000 (2010) and $6,920,000      (2009)      |   |           | 453,281,000 |   |              |   | 453,119,000 |   |
| Mortgage      loans held for sale                                                                 |   |           | 2,724,000   |   |              |   | 660,000 |   |
| Premises      and equipment, net                                                                  |   |           | 6,824,000   |   |              |   | 6,861,000 |   |
| Accrued      interest receivable                                                                  |   |           | 3,045,000   |   |              |   | 3,167,000 |   |
| Bank      owned life insurance                                                                    |   |           | 9,575,000   |   |              |   | 9,488,000 |   |
| Other      assets                                                                                 |   |           | 7,507,000   |   |              |   | 7,708,000 |   |
|        Total      assets                                       |   | $              | 662,226,000 |   |              | $      | 663,844,000 |   |
|                                                                                              |   |           |        |   |              |   |   |   |
| Liabilities      and stockholders' equity                                                         |   |           |        |   |              |   |   |   |
|                                                                                              |   |           |        |   |              |   |   |   |
| Liabilities                                                                                       |   |           |        |   |              |   |   |   |
| Deposits:                                                                                         |   |           |        |   |              |   |   |   |
|     Noninterest-bearing                                                       |   | $              | 94,651,000  |   |              | $      | 88,427,000 |   |
|     Interest-bearing                                                          |   |           | 448,279,000 |   |              |   | 441,503,000 |   |
|         Total      deposits                               |   |           | 542,930,000 |   |              |   | 529,930,000 |   |
|                                                                                              |   |           |        |   |              |   |   |   |
| Federal      Home Loan Bank of New York Advances                                                  |   |           | 36,000,000  |   |              |   | 54,600,000 |   |
| Subordinated      debentures                                                                      |   |           | 7,217,000   |   |              |   | 7,217,000 |   |
| Securities      sold under agreements to repurchase                                               |   |           | 15,399,000  |   |              |   | 15,396,000 |   |
| Accrued      interest payable                                                                     |   |           | 1,000,000   |   |              |   | 1,193,000 |   |
| Accrued      expenses and other liabilities                                                       |   |           | 5,677,000   |   |              |   | 1,997,000 |   |
|         Total      liabilities                            |   |           | 608,223,000 |   |              |   | 610,333,000 |   |
|                                                                                              |   |           |        |   |              |   |   |   |
| Commitments      and contingencies                                                                |   |           | -           |   |              |   | - |   |
|                                                                                              |   |           |        |   |              |   |   |   |
| Stockholders'      equity                                                                         |   |           |        |   |              |   |   |   |
| Preferred      stock, no par value; 2,500,000 shares authorized; 10,000      shares               |   |           |        |   |              |   |   |   |
|     issued      and outstanding at March 31, 2010 and December 31, 2009.      |   |           |        |   |              |   |   |   |
|     Liquidation      preference of $10,000,000                                |   |           | 9,750,000   |   |              |   | 9,736,000 |   |
| Common      stock, no par value; 10,000,000 shares authorized;                                    |   |           |        |   |              |   |   |   |
|     5,846,928      and 5,834,515 shares issued: 5,842,366 and 5,834,515shares |   |           |        |   |              |   |   |   |
|     outstanding      at March 31, 2010 and December 31, 2009, respectively    |   |           | 40,498,000  |   |              |   | 40,415,000 |   |
| Treasury      stock, 4,561 shares outstanding at March 31, 2010                                   |   |           | (43,000     | )      |              |   | - |   |
| Retained      earnings                                                                            |   |           | 3,128,000   |   |              |   | 2,922,000 |   |
| Accumulated      other comprehensive income, net                                                  |   |           | 670,000     |   |              |   | 438,000 |   |
|         Total      stockholders' equity                   |   |           | 54,003,000  |   |              |   | 53,511,000 |   |
|                                                                                              |   |           |        |   |              |   |   |   |
|         Total      liabilities and stockholders' equity   |   | $              | 662,226,000 |   |              | $      | 663,844,000 |   |
|                                                                                              |   |           |        |   |              |   |   |   |
|                                                                                              |   |           |        |   |              |   |   |   |
| See      notes to unaudited consolidated financial statements.                                    |   |           |        |   |              |   |   |   |

----

Index

| Stewardship Financial Corporation and Subsidiary |
|--------------------------------------------------|
| Consolidated      Statements of Income           |
| (Unaudited)                                      |

|                                                                                          |   |                    |      |   |   |   |
|-----------------------------------------------------------------------------------------------|--------|-------------------------|-----------|--------|--------|--------|
|                                                                                          |   | Three      Months Ended |      |
|                                                                                          |   | March      31,          |      |
|                                                                                          |   | 2010                    |      |   | 2009   |   |
| Interest      income:                                                                         |   |                    |      |   |   |   |
| Loans                                                                                         |   | $                       | 6,874,000 |   |   | $      | 6,608,000 |   |
| Securities      held to maturity                                                              |   |                    |      |   |   |   |   |   |
| Taxable                                                                                       |   |                    | 422,000   |   |   |   | 441,000 |   |
| Non-taxable                                                                                   |   |                    | 231,000   |   |   |   | 213,000 |   |
| Securities      available for sale                                                            |   |                    |      |   |   |   |   |   |
| Taxable                                                                                       |   |                    | 880,000   |   |   |   | 1,137,000 |   |
| Non-taxable                                                                                   |   |                    | 49,000    |   |   |   | 52,000 |   |
| FHLB      dividends                                                                           |   |                    | 37,000    |   |   |   | 19,000 |   |
| Other      interest-earning assets                                                            |   |                    | 2,000     |   |   |   | 3,000 |   |
| Total      interest income                                                                    |   |                    | 8,495,000 |   |   |   | 8,473,000 |   |
|                                                                                          |   |                    |      |   |   |   |   |   |
| Interest      expense:                                                                        |   |                    |      |   |   |   |   |   |
| Deposits                                                                                      |   |                    | 1,820,000 |   |   |   | 2,372,000 |   |
| Borrowed      money                                                                           |   |                    | 496,000   |   |   |   | 503,000 |   |
| Total      interest expense                                                                   |   |                    | 2,316,000 |   |   |   | 2,875,000 |   |
|                                                                                          |   |                    |      |   |   |   |   |   |
| Net      interest income before provision for loan losses                                     |   |                    | 6,179,000 |   |   |   | 5,598,000 |   |
| Provision      for loan losses                                                                |   |                    | 1,550,000 |   |   |   | 150,000 |   |
| Net      interest income after provision for loan losses                                      |   |                    | 4,629,000 |   |   |   | 5,448,000 |   |
|                                                                                          |   |                    |      |   |   |   |   |   |
| Noninterest      income:                                                                      |   |                    |      |   |   |   |   |   |
| Fees      and service charges                                                                 |   |                    | 469,000   |   |   |   | 396,000 |   |
| Bank      owned life insurance                                                                |   |                    | 86,000    |   |   |   | 83,000 |   |
| Gain      on sales of mortgage loans                                                          |   |                    | 55,000    |   |   |   | 11,000 |   |
| Gain      on calls and sales of securities                                                    |   |                    | 328,000   |   |   |   | 39,000 |   |
| Merchant      processing                                                                      |   |                    | -         |   |   |   | 118,000 |   |
| Other                                                                                         |   |                    | 73,000    |   |   |   | 60,000 |   |
| Total      noninterest income                                                                 |   |                    | 1,011,000 |   |   |   | 707,000 |   |
|                                                                                          |   |                    |      |   |   |   |   |   |
| Noninterest      expenses:                                                                    |   |                    |      |   |   |   |   |   |
| Salaries      and employee benefits                                                           |   |                    | 2,126,000 |   |   |   | 2,059,000 |   |
| Occupancy,      net                                                                           |   |                    | 489,000   |   |   |   | 472,000 |   |
| Equipment                                                                                     |   |                    | 309,000   |   |   |   | 265,000 |   |
| Data      processing                                                                          |   |                    | 325,000   |   |   |   | 305,000 |   |
| FDIC      insurance premium                                                                   |   |                    | 224,000   |   |   |   | 170,000 |   |
| Charitable      contributions                                                                 |   |                    | 165,000   |   |   |   | 171,000 |   |
| Merchant      processing                                                                      |   |                    | -         |   |   |   | 108,000 |   |
| Other                                                                                         |   |                    | 786,000   |   |   |   | 858,000 |   |
| Total      noninterest expenses                                                               |   |                    | 4,424,000 |   |   |   | 4,408,000 |   |
| Income      before income tax expense                                                         |   |                    | 1,216,000 |   |   |   | 1,747,000 |   |
| Income      tax expense                                                                       |   |                    | 345,000   |   |   |   | 560,000 |   |
| Net      income                                                                               |   |                    | 871,000   |   |   |   | 1,187,000 |   |
| Dividends      on preferred stock and accretion                                               |   |                    | 137,000   |   |   |   | 92,000 |   |
| Net      income available to common stockholders                                              |   | $                       | 734,000   |   |   | $      | 1,095,000 |   |
|                                                                                          |   |                    |      |   |   |   |   |   |
| Basic      earnings per common share                                                          |   | $                       | 0.13      |   |   | $      | 0.19 |   |
| Diluted      earnings per common share                                                        |   | $                       | 0.13      |   |   | $      | 0.19 |   |
|                                                                                          |   |                    |      |   |   |   |   |   |
| Weighted      average number of common shares outstanding                                     |   |                    | 5,839,974 |   |   |   | 5,829,321 |   |
| Weighted      average number of diluted common                                                |   |                    |      |   |   |   |   |   |
|      shares      outstanding                                         |   |                    | 5,841,633 |   |   |   | 5,834,953 |   |
|                                                                                          |   |                    |      |   |   |   |   |   |
| Share      data has been restated to reflect a 5% stock dividend paid November 16,      2009. |   |                    |      |   |   |
|                                                                                          |   |                    |      |   |   |   |   |   |
| See      notes to unaudited consolidated financial statements.                                |   |                    |      |   |   |   |   |   |

----

Index

| Stewardship      Financial Corporation and Subsidiary           |
|-----------------------------------------------------------------|
| Consolidated      Statement of Changes in Stockholders'  Equity |
| (Unaudited)                                                     |
|                                                            |   |   |   |   |   |   |   |

|                                                                            |   | Three      Months Ended March 31, 2010 |      |
|---------------------------------------------------------------------------------|--------|----------------------------------------|-----------|
|                                                                            |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                            |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                                            |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   | Comprehensive |   |   |   |   |
|                                                                            |   | Preferred                              |      |   | Common      Stock |   |   | Treasury |   |   | Retained |   |   | Gain      (Loss), |   |   |   |   |
|                                                                            |   | Stock                                  |      |   | Shares |   |   | Amount |   |   | Stock |   |   | Earnings |   |   | Net |   |   | Total |   |
|                                                                            |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      -- December 31, 2009                                               |   | $                                      | 9,736,000 |   |   |   | 5,834,515 |   |   | $ | 40,415,000 |   |   | $ | - |   |   | $ | 2,922,000 |   |   | $ | 438,000 |   |   | $ | 53,511,000 |   |
| Cash      dividends paid on common stock                                        |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (526,000 | ) |   |   | - |   |   |   | (526,000 | ) |
| Payment      of discount on dividend                                            |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     reinvestment      plan                                  |   |                                   | -         |   |   |   | - |   |   |   | (9,000 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (9,000 | ) |
| Cash      dividends accrued on preferred stock                                  |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (125,000 | ) |   |   | - |   |   |   | (125,000 | ) |
| Common      stock issued under stock plans                                      |   |                                   | -         |   |   |   | 3,037 |   |   |   | 24,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 24,000 |   |
| Stock      option compensation expense                                          |   |                                   | -         |   |   |   | - |   |   |   | 13,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 13,000 |   |
| Stock      options exercised                                                    |   |                                   | -         |   |   |   | 9,376 |   |   |   | 55,000 |   |   |   | (43,000 | ) |   |   | - |   |   |   | - |   |   |   | 12,000 |   |
| Accretion      of discount on preferred stock                                   |   |                                   | 12,000    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (12,000 | ) |   |   |   |   |   |   | - |   |
| Amortization      of issuance costs                                             |   |                                   | 2,000     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,000 | ) |   |   |   |   |   |   | - |   |
| Comprehensive      income:                                                      |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                 |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 871,000 |   |   |   | - |   |   |   | 871,000 |   |
|    Change      in unrealized holding gains on                    |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      securities      available for sale arising during |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      the      period (net tax expense of $131,000)     |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 196,000 |   |   |   | 196,000 |   |
|    Reclassification      adjustment for gains in                 |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      net      income (net of taxes of $76,000)         |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 141,000 |   |   |   | 141,000 |   |
|    Change      in fair value of interest rate                    |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      swap      (net of tax benefit of $70,000)         |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (105,000 | ) |   |   | (105,000 | ) |
| Total      comprehensive income                                                 |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,103,000 |   |
|                                                                            |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      -- March 31, 2010                                                  |   | $                                      | 9,750,000 |   |   |   | 5,846,928 |   |   | $ | 40,498,000 |   |   | $ | (43,000 | ) |   | $ | 3,128,000 |   |   | $ | 670,000 |   |   | $ | 54,003,000 |   |
|                                                                            |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                            |   | Three      Months Ended March 31, 2009 |      |
|---------------------------------------------------------------------------------|--------|----------------------------------------|-----------|
|                                                                            |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                            |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                                            |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   | Comprehensive |   |   |   |   |
|                                                                            |   | Preferred                              |      |   | Common      Stock |   |   | Treasury |   |   | Retained |   |   | Gain      (Loss), |   |   |   |   |
|                                                                            |   | Stock                                  |      |   | Shares |   |   | Amount |   |   | Stock |   |   | Earnings |   |   | Net |   |   | Total |   |
|                                                                            |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      -- December 31, 2008                                               |   | $                                      | -         |   |   |   | 5,575,095 |   |   | $ | 37,962,000 |   |   | $ | (272,000 | ) |   | $ | 4,383,000 |   |   | $ | 723,000 |   |   | $ | 42,796,000 |   |
| Proceeds      from issuance of preferred                                        |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     stock      and a warrant                                |   |                                   | 9,731,000 |   |   |   |   |   |   |   | 269,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 10,000,000 |   |
| Preferred      stock issuance costs                                             |   |                                   | (49,000   | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (49,000 | ) |
| Cash      dividends paid on common stock                                        |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (527,000 | ) |   |   | - |   |   |   | (527,000 | ) |
| Payment      of discount on dividend                                            |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     reinvestment      plan                                  |   |                                   | -         |   |   |   | - |   |   |   | (11,000 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (11,000 | ) |
| Cash      dividends accrued on preferred stock                                  |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (84,000 | ) |   |   | - |   |   |   | (84,000 | ) |
| Common      stock issued under stock plans                                      |   |                                   | -         |   |   |   | 2,288 |   |   |   | 22,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 22,000 |   |
| Stock      option compensation expense                                          |   |                                   | -         |   |   |   | - |   |   |   | 12,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 12,000 |   |
| Stock      options exercised                                                    |   |                                   | -         |   |   |   | 7,330 |   |   |   | 40,000 |   |   |   | (32,000 | ) |   |   | - |   |   |   | - |   |   |   | 8,000 |   |
| Repurchase      of common stock                                                 |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | (75,000 | ) |   |   | - |   |   |   | - |   |   |   | (75,000 | ) |
| Accretion      of discount on preferred stock                                   |   |                                   | 8,000     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (8,000 | ) |   |   |   |   |   |   | - |   |
| Amortization      of issuance costs                                             |   |                                   | 2,000     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   | 2,000 |   |
| Comprehensive      income:                                                      |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                 |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,187,000 |   |   |   | - |   |   |   | 1,187,000 |   |
|    Change      in unrealized holding gains on                    |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      securities      available for sale arising during |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      the      period (net tax expense of $177,000)     |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 275,000 |   |   |   | 275,000 |   |
|    Reclassification      adjustment for gains in                 |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      net      income (net of taxes of $15,000)         |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 24,000 |   |   |   | 24,000 |   |
| Total      comprehensive income                                                 |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,486,000 |   |
|                                                                            |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      -- March 31, 2009                                                  |   | $                                      | 9,692,000 |   |   |   | 5,584,713 |   |   | $ | 38,294,000 |   |   | $ | (379,000 | ) |   | $ | 4,951,000 |   |   | $ | 1,022,000 |   |   | $ | 53,580,000 |   |
|                                                                            |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See      notes to unaudited consolidated financial statements.                  |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Index

| Stewardship      Financial Corporation and Subsidiary |
|-------------------------------------------------------|
| Consolidated      Statements of Comprehensive Income  |
| (Unaudited)                                           |
|                                                  |   |   |   |   |   |   |   |

|                                                                                                     |   | Three      Months Ended March 31, |     |
|----------------------------------------------------------------------------------------------------------|--------|-----------------------------------|----------|
|                                                                                                     |   | 2010                              |     |   | 2009 |   |
|                                                                                                     |   |                              |     |   |   |   |
| Change      in unrealized holding gains on securities                                                    |   |                              |     |   |   |   |
| available      for sale arising during the period)                                                       |   | $                                 | 872,000  |   |   | $ | 530,000 |   |
| Reclassification      adjustment for gains in net income                                                 |   |                              | 328,000  |   |   |   | 39,000 |   |
| Net      unrealized gains                                                                                |   |                              | 544,000  |   |   |   | 491,000 |   |
| Tax      effect                                                                                          |   |                              | 207,000  |   |   |   | 192,000 |   |
| Net      unrealized gains, net of tax amount                                                             |   |                              | 337,000  |   |   |   | 299,000 |   |
|                                                                                                     |   |                              |     |   |   |   |   |   |
| Change      in fair value of interest rate swap                                                          |   |                              | (175,000 | ) |   |   | - |   |
| Tax      effect                                                                                          |   |                              | (70,000  | ) |   |   | - |   |
| Change      in fair value of interest rate swap, net of tax amount                                       |   |                              | (105,000 | ) |   |   | - |   |
|                                                                                                     |   |                              |     |   |   |   |   |   |
| Total      other comprehensive income                                                                    |   | $                                 | 232,000  |   |   | $ | 299,000 |   |
|                                                                                                     |   |                              |     |   |   |   |   |   |
|                                                                                                     |   |                              |     |   |   |   |   |   |
| The      following is a summary of the accumulated other comprehensive income      balances, net of tax. |   |                              |     |   |   |
|                                                                                                     |   |                              |     |   |   |   |   |   |

|                                                           |   | March      31, 2010 |     |   | December      31, 2009 |   |
|----------------------------------------------------------------|--------|---------------------|----------|--------|------------------------|--------|
|                                                           |   |                |     |   |                   |   |
| Unrealized      gain on securities available for sale          |   | $                   | 930,000  |   |                   | $      | 593,000 |   |
| Unrealized      loss on fair value of interest rate swap       |   |                | (260,000 | )      |                   |   | (155,000 | ) |
|                                                           |   |                |     |   |                   |   |   |   |
| Accumulated      other comprehensive income, net               |   | $                   | 670,000  |   |                   | $      | 438,000 |   |
|                                                           |   |                |     |   |                   |   |   |   |
|                                                           |   |                |     |   |                   |   |   |   |
| See      notes to unaudited consolidated financial statements. |   |                |     |   |                   |   |   |   |

----

Index

| Stewardship      Financial Corporation and Subsidiary |
|-------------------------------------------------------|
| Consolidated      Statements of Cash Flows            |
| (Unaudited)                                           |
|                                                  |   |   |   |   |   |   |   |   |

|                                                                                         | Three      Months Ended |        |
|----------------------------------------------------------------------------------------------|-------------------------|-------------|
|                                                                                         | March      31,          |        |
|                                                                                         | 2010                    |        |   | 2009 |   |
| Cash      flows from operating activities:                                                   |                    |        |   |   |   |
| Net      income                                                                              | $                       | 871,000     |   |   | $ | 1,187,000 |   |
| Adjustments      to reconcile net income to                                                  |                    |        |   |   |   |   |   |
| net      cash provided by operating activities:                                              |                    |        |   |   |   |   |   |
| Depreciation      and amortization of premises and equipment                                 |                    | 214,000     |   |   |   | 210,000 |   |
| Amortization      of premiums and accretion of discounts, net                                |                    | 161,000     |   |   |   | 123,000 |   |
| Accretion      of deferred loan fees                                                         |                    | (14,000     | ) |   |   | (56,000 | ) |
| Provision      for loan losses                                                               |                    | 1,550,000   |   |   |   | 150,000 |   |
| Originations      of mortgage loans held for sale                                            |                    | (7,928,000  | ) |   |   | (2,948,000 | ) |
| Proceeds      from sale of mortgage loans                                                    |                    | 5,919,000   |   |   |   | 1,385,000 |   |
| Gain      on sales of mortgage loans                                                         |                    | (55,000     | ) |   |   | (11,000 | ) |
| Gain      on sales and calls of securities                                                   |                    | (328,000    | ) |   |   | (39,000 | ) |
| Deferred      income tax benefit                                                             |                    | (544,000    | ) |   |   | (69,000 | ) |
| Amortization      of intangible assets                                                       |                    | 5,000       |   |   |   | 8,000 |   |
| Nonqualified      stock option expense                                                       |                    | 13,000      |   |   |   | 12,000 |   |
| Amortization      of stock issuance costs                                                    |                    | -           |   |   |   | 2,000 |   |
| Increase      in bank owned life insurance                                                   |                    | (86,000     | ) |   |   | (83,000 | ) |
| Decrease      in accrued interest receivable                                                 |                    | 122,000     |   |   |   | 37,000 |   |
| (Decrease)      increase in accrued interest payable                                         |                    | (193,000    | ) |   |   | 165,000 |   |
| Decrease      (increase) in other assets                                                     |                    | 532,000     |   |   |   | (328,000 | ) |
| Increase      in other liabilities                                                           |                    | 52,000      |   |   |   | 615,000 |   |
| Net      cash provided by operating activities                                               |                    | 291,000     |   |   |   | 360,000 |   |
|                                                                                         |                    |        |   |   |   |   |   |
| Cash      flows from investing activities:                                                   |                    |        |   |   |   |   |   |
| Purchase      of securities available for sale                                               |                    | (3,085,000  | ) |   |   | (30,248,000 | ) |
| Proceeds      from maturities and principal repayments on securities available for      sale |                    | 3,944,000   |   |   |   | 2,730,000 |   |
| Proceeds      from sales and calls on securities available for sale                          |                    | 12,557,000  |   |   |   | 11,417,000 |   |
| Purchase      of securities held to maturity                                                 |                    | (5,566,000  | ) |   |   | (24,289,000 | ) |
| Proceeds      from maturities and principal repayments on securities held to      maturity   |                    | 1,443,000   |   |   |   | 1,018,000 |   |
| Proceeds      from calls on securities held to maturity                                      |                    | 1,000,000   |   |   |   | 4,250,000 |   |
| Sale      (purchase) of FHLB-NY stock                                                        |                    | 837,000     |   |   |   | (612,000 | ) |
| Net      (increase) decrease in loans                                                        |                    | (1,698,000  | ) |   |   | 2,542,000 |   |
| Additions      to premises and equipment                                                     |                    | (177,000    | ) |   |   | (71,000 | ) |
| Net      cash provided by (used in) investing activities                                     |                    | 9,255,000   |   |   |   | (33,263,000 | ) |
|                                                                                         |                    |        |   |   |   |   |   |
| Cash      flows from financing activities:                                                   |                    |        |   |   |   |   |   |
| Net      increase (decrease) in noninterest-bearing deposits                                 |                    | 6,224,000   |   |   |   | (11,723,000 | ) |
| Net      increase in interest-bearing deposits                                               |                    | 6,776,000   |   |   |   | 20,662,000 |   |
| Net      increase in securities sold under agreements to repurchase                          |                    | 3,000       |   |   |   | 2,000 |   |
| Net      (decrease) increase in short term borrowings                                        |                    | (18,600,000 | ) |   |   | 7,600,000 |   |
| Proceeds      from long term borrowings                                                      |                    | -           |   |   |   | 6,000,000 |   |
| Proceeds      from issuance of preferred stock and warrants                                  |                    | -           |   |   |   | 9,951,000 |   |
| Cash      dividends paid on common stock                                                     |                    | (526,000    | ) |   |   | (527,000 | ) |
| Cash      dividends paid on preferred stock                                                  |                    | (125,000    | ) |   |   | - |   |
| Payment      of discount on dividend reinvestment plan                                       |                    | (9,000      | ) |   |   | (11,000 | ) |
| Purchase      of treasury stock                                                              |                    | -           |   |   |   | (75,000 | ) |
| Exercise      of stock options                                                               |                    | 12,000      |   |   |   | 8,000 |   |
| Issuance      of common stock                                                                |                    | 24,000      |   |   |   | 22,000 |   |
| Net      cash (used in) provided by financing activities                                     |                    | (6,221,000  | ) |   |   | 31,909,000 |   |
|                                                                                         |                    |        |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents                                    |                    | 3,325,000   |   |   |   | (994,000 | ) |
| Cash      and cash equivalents - beginning                                                   |                    | 8,871,000   |   |   |   | 12,814,000 |   |
| Cash      and cash equivalents - ending                                                      | $                       | 12,196,000  |   |   | $ | 11,820,000 |   |

----

Index

| Stewardship      Financial Corporation and Subsidiary  |
|--------------------------------------------------------|
| Consolidated      Statements of Cash Flows (continued) |
| (Unaudited)                                            |
|                                                   |   |   |   |   |   |   |   |   |

|                                                               |   | Three      Months Ended |      |
|--------------------------------------------------------------------|--------|-------------------------|-----------|
|                                                               |   | March      31,          |      |
|                                                               |   | 2010                    |      |   | 2009 |   |
| Supplemental      disclosures of cash flow information:            |   |                    |      |   |   |   |
| Cash      paid during the period for interest                      |   | $                       | 2,509,000 |   |   | $ | 2,710,000 |   |
| Cash      paid during the period for income taxes                  |   | $                       | -         |   |   | $ | - |   |
| Noncash      investing activities - security purchases due brokers |   | $                       | 3,523,000 |   |   | $ | 3,010,000 |   |
|                                                               |   |                    |      |   |   |   |   |   |
|                                                               |   |                    |      |   |   |   |   |   |
| See      notes to unaudited consolidated financial statements.     |   |                    |      |   |   |   |   |   |

----

Index

t

----

Index

----

Index

|                                          |   | March      31, 2010    |        |
|-----------------------------------------------|--------|------------------------|-------------|
|                                          |   | Amortized              |        |   | Gross      Unrealized |   |   | Fair |   |
|                                          |   | Cost                   |        |   | Gains |   |   | Losses |   |   | Value |   |
|                                          |   |                   |        |   |   |   |   |   |   |   |   |   |
| U.S.      government-sponsored agencies       |   | $                      | 31,438,000  |   |   | $ | 182,000 |   |   | $ | 58,000 |   |   | $ | 31,562,000 |   |
| Obligations      of state and political       |   |                   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   subdivisions                      |   |                   | 5,282,000   |   |   |   | 153,000 |   |   |   | 8,000 |   |   |   | 5,427,000 |   |
| Mortgage-backed      securities - residential |   |                   | 52,584,000  |   |   |   | 1,296,000 |   |   |   | 98,000 |   |   |   | 53,782,000 |   |
| Other      equity investments                 |   |                   | 3,096,000   |   |   |   | 72,000 |   |   |   | 13,000 |   |   |   | 3,155,000 |   |
|                                          |   | $                      | 92,400,000  |   |   | $ | 1,703,000 |   |   | $ | 177,000 |   |   | $ | 93,926,000 |   |
|                                          |   |                   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   | December      31, 2009 |        |
|                                          |   | Amortized              |        |   | Gross      Unrealized |   |   | Fair |   |
|                                          |   | Cost                   |        |   | Gains |   |   | Losses |   |   | Value |   |
|                                          |   |                   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      government-sponsored agencies       |   | $                      | 32,642,000  |   |   | $ | 92,000 |   |   | $ | 448,000 |   |   | $ | 32,286,000 |   |
| Obligations      of state and political       |   |                   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   subdivisions                      |   |                   | 5,284,000   |   |   |   | 122,000 |   |   |   | 9,000 |   |   |   | 5,397,000 |   |
| Mortgage-backed      securities - residential |   |                   | 61,060,000  |   |   |   | 1,423,000 |   |   |   | 255,000 |   |   |   | 62,228,000 |   |
| Other      equity investments                 |   |                   | 3,058,000   |   |   |   | 66,000 |   |   |   | 9,000 |   |   |   | 3,115,000 |   |
|                                          |   | $                      | 102,044,000 |   |   | $ | 1,703,000 |   |   | $ | 721,000 |   |   | $ | 103,026,000 |   |

|                                          |   | March      31, 2010    |       |
|-----------------------------------------------|--------|------------------------|------------|
|                                          |   | Amortized              |       |   | Gross      Unrecognized |   |   | Fair |   |
|                                          |   | Cost                   |       |   | Gains |   |   | Losses |   |   | Value |   |
|                                          |   |                   |       |   |   |   |   |   |   |   |   |   |
| U.S.      government-sponsored agencies       |   | $                      | 24,085,000 |   |   | $ | 149,000 |   |   | $ | 70,000 |   |   | $ | 24,164,000 |   |
| Obligations      of state and political       |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   subdivisions                      |   |                   | 27,299,000 |   |   |   | 1,090,000 |   |   |   | 45,000 |   |   |   | 28,344,000 |   |
| Mortgage-backed      securities - residential |   |                   | 19,374,000 |   |   |   | 733,000 |   |   | $ | 4,000 |   |   |   | 20,103,000 |   |
|                                          |   | $                      | 70,758,000 |   |   | $ | 1,972,000 |   |   | $ | 119,000 |   |   | $ | 72,611,000 |   |
|                                          |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   | December      31, 2009 |       |
|                                          |   | Amortized              |       |   | Gross      Unrecognized |   |   | Fair |   |
|                                          |   | Cost                   |       |   | Gains |   |   | Losses |   |   | Value |   |
|                                          |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      government-sponsored agencies       |   | $                      | 19,921,000 |   |   | $ | 90,000 |   |   | $ | 351,000 |   |   | $ | 19,660,000 |   |
| Obligations      of state and political       |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   subdivisions                      |   |                   | 27,038,000 |   |   |   | 871,000 |   |   |   | 84,000 |   |   |   | 27,825,000 |   |
| Mortgage-backed      securities - residential |   |                   | 20,758,000 |   |   |   | 547,000 |   |   |   | 25,000 |   |   |   | 21,280,000 |   |
|                                          |   | $                      | 67,717,000 |   |   | $ | 1,508,000 |   |   | $ | 460,000 |   |   | $ | 68,765,000 |   |

----

Index

|                                          |   | March      31, 2010 |       |
|-----------------------------------------------|--------|---------------------|------------|
|                                          |   | Amortized           |       |   | Fair |   |
|                                          |   | Cost                |       |   | Value |   |
|                                          |   |                |       |   |   |   |
| Maturity                                      |   |                |       |   |   |   |
| Available      for sale                       |   |                |       |   |   |   |
| After      one year, but within five years    |   | $                   | 6,608,000  |   |   | $ | 6,630,000 |   |
| After      five years, but within ten years   |   |                | 16,631,000 |   |   |   | 16,782,000 |   |
| After      ten years                          |   |                | 13,481,000 |   |   |   | 13,577,000 |   |
| Mortgage-backed      securities - residential |   |                | 52,584,000 |   |   |   | 53,782,000 |   |
| Total                                         |   | $                   | 89,304,000 |   |   | $ | 90,771,000 |   |
|                                          |   |                |       |   |   |   |   |   |
| Held      to maturity                         |   |                |       |   |   |   |   |   |
| Within      one year                          |   | $                   | 1,352,000  |   |   | $ | 1,380,000 |   |
| After      one year, but within five years    |   |                | 18,955,000 |   |   |   | 19,378,000 |   |
| After      five years, but within ten years   |   |                | 20,839,000 |   |   |   | 21,312,000 |   |
| After      ten years                          |   |                | 10,238,000 |   |   |   | 10,438,000 |   |
| Mortgage-backed      securities - residential |   |                | 19,374,000 |   |   |   | 20,103,000 |   |
| Total                                         |   | $                   | 70,758,000 |   |   | $ | 72,611,000 |   |

----

Index

| Available      for Sale                                                              |   |                     |       |   |                     |   |     |   |   |   |       |   |   |   |    |   |       |   |
|--------------------------------------------------------------------------------------|--------|--------------------------|------------|--------|--------------------------|--------|----------|--------|--------|--------|------------|--------|--------|--------|---------|--------|------------|--------|
| March      31, 2010                                                                  |   | Less      than 12 Months |       |   | 12      Months or Longer |   |     | Total  |   |
|                                                                                 |   | Fair                     |       |   | Unrealized               |   |     | Fair   |   |   | Unrealized |   |   | Fair   |    |   | Unrealized |   |
|                                                                                 |   | Value                    |       |   | Losses                   |   |     | Value  |   |   | Losses     |   |   | Value  |    |   | Losses     |   |
|                                                                                 |   |                     |       |   |                     |   |     |   |   |   |       |   |   |   |    |   |       |   |
| U.S.      government-                                                                |   |                     |       |   |                     |   |     |   |   |   |       |   |   |   |    |   |       |   |
|   sponsored      agencies                                                  |   | $                        | 9,397,000  |   |                     | $      | (58,000  | )      |   | $      | -          |   |   | $      | -       |   |       | $      | 9,397,000 |   |   | $ | (58,000 | ) |
| Obligations      of state and                                                        |   |                     |       |   |                     |   |     |   |   |   |       |   |   |   |    |   |       |   |   |   |   |   |   |   |
|   political      subdivisions                                              |   |                     | 195,000    |   |                     |   | -        |   |   |   | 443,000    |   |   |   | (8,000  | )      |       |   | 638,000 |   |   |   | (8,000 | ) |
| Mortgage-backed                                                                      |   |                     |       |   |                     |   |     |   |   |   |       |   |   |   |    |   |       |   |   |   |   |   |   |   |
|   securities      - residential                                            |   |                     | 13,145,000 |   |                     |   | (98,000  | )      |   |   | -          |   |   |   | -       |   |       |   | 13,145,000 |   |   |   | (98,000 | ) |
| Other      equity investments                                                        |   |                     | -          |   |                     |   | -        |   |   |   | 62,000     |   |   |   | (13,000 | )      |       |   | 62,000 |   |   |   | (13,000 | ) |
|      Total      temporarily                                 |   |                     |       |   |                     |   |     |   |   |   |       |   |   |   |    |   |       |   |   |   |   |   |   |   |
|           impaired      securities |   | $                        | 22,737,000 |   |                     | $      | (156,000 | )      |   | $      | 505,000    |   |   | $      | (21,000 | )      |       | $      | 23,242,000 |   |   | $ | (177,000 | ) |
|                                                                                 |   |                     |       |   |                     |   |     |   |   |   |       |   |   |   |    |   |       |   |   |   |   |   |   |   |
|                                                                                 |   |                     |       |   |                     |   |     |   |   |   |       |   |   |   |    |   |       |   |   |   |   |   |   |   |

| December      31, 2009                                                               |   | Less      than 12 Months |       |   | 12      Months or Longer |   |     | Total  |   |
|--------------------------------------------------------------------------------------|--------|--------------------------|------------|--------|--------------------------|--------|----------|--------|--------|
|                                                                                 |   | Fair                     |       |   | Unrealized               |   |     | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                                                                                 |   | Value                    |       |   | Losses                   |   |     | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
|                                                                                 |   |                     |       |   |                     |   |     |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      government-                                                                |   |                     |       |   |                     |   |     |   |   |   |   |   |   |   |   |   |   |   |
|   sponsored      agencies                                                  |   | $                        | 23,282,000 |   |                     | $      | (361,000 | )      |   | $ | 2,913,000 |   |   | $ | (87,000 | ) |   | $ | 26,195,000 |   |   | $ | (448,000 | ) |
| Obligations      of state and                                                        |   |                     |       |   |                     |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   political      subdivisions                                              |   |                     | 373,000    |   |                     |   | (2,000   | )      |   |   | 443,000 |   |   |   | (7,000 | ) |   |   | 816,000 |   |   |   | (9,000 | ) |
| Mortgage-backed                                                                      |   |                     |       |   |                     |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   securities      - residential                                            |   |                     | 15,156,000 |   |                     |   | (255,000 | )      |   |   | - |   |   |   | - |   |   |   | 15,156,000 |   |   |   | (255,000 | ) |
| Other      equity investments                                                        |   |                     | -          |   |                     |   | -        |   |   |   | 33,000 |   |   |   | (9,000 | ) |   |   | 33,000 |   |   |   | (9,000 | ) |
|      Total      temporarily                                 |   |                     |       |   |                     |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           impaired      securities |   | $                        | 38,811,000 |   |                     | $      | (618,000 | )      |   | $ | 3,389,000 |   |   | $ | (103,000 | ) |   | $ | 42,200,000 |   |   | $ | (721,000 | ) |
|                                                                                 |   |                     |       |   |                     |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |                     |       |   |                     |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      to Maturity                                                                |   |                     |       |   |                     |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| March      31, 2010                                                                  |   | Less      than 12 Months |      |   | 12      Months or Longer |   |    | Total  |   |
|--------------------------------------------------------------------------------------|--------|--------------------------|-----------|--------|--------------------------|--------|---------|--------|--------|
|                                                                                 |   | Fair                     |      |   | Unrecognized             |   |    | Fair   |   |   | Unrecognized |   |   | Fair |   |   | Unrecognized |   |
|                                                                                 |   | Value                    |      |   | Losses                   |   |    | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
|                                                                                 |   |                     |      |   |                     |   |    |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      government-                                                                |   |                     |      |   |                     |   |    |   |   |   |   |   |   |   |   |   |   |   |
|   sponsored      agencies                                                  |   | $                        | 6,308,000 |   |                     | $      | (27,000 | )      |   | $ | 6,957,000 |   |   | $ | (43,000 | ) |   | $ | 13,265,000 |   |   | $ | (70,000 | ) |
| Obligations      of state and                                                        |   |                     |      |   |                     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   political      subdivisions                                              |   |                     | 1,108,000 |   |                     |   | (4,000  | )      |   |   | 1,384,000 |   |   |   | (41,000 | ) |   |   | 2,492,000 |   |   |   | (45,000 | ) |
| Mortgage-backed                                                                      |   |                     |      |   |                     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   securities      - residential                                            |   |                     | 1,935,000 |   |                     |   | (4,000  | )      |   |   | - |   |   |   | - |   |   |   | 1,935,000 |   |   |   | (4,000 | ) |
|      Total      temporarily                                 |   |                     |      |   |                     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           impaired      securities |   | $                        | 9,351,000 |   |                     | $      | (35,000 | )      |   | $ | 8,341,000 |   |   | $ | (84,000 | ) |   | $ | 17,692,000 |   |   | $ | (119,000 | ) |
|                                                                                 |   |                     |      |   |                     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |                     |      |   |                     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| December      31, 2009                                                               |   | Less      than 12 Months |       |   | 12      Months or Longer |   |     | Total  |   |
|--------------------------------------------------------------------------------------|--------|--------------------------|------------|--------|--------------------------|--------|----------|--------|--------|
|                                                                                 |   | Fair                     |       |   | Unrecognized             |   |     | Fair   |   |   | Unrecognized |   |   | Fair |   |   | Unrecognized |   |
|                                                                                 |   | Value                    |       |   | Losses                   |   |     | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
|                                                                                 |   |                     |       |   |                     |   |     |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      government-                                                                |   |                     |       |   |                     |   |     |   |   |   |   |   |   |   |   |   |   |   |
|   sponsored      agencies                                                  |   | $                        | 12,529,000 |   |                     | $      | (351,000 | )      |   | $ | - |   |   | $ | - |   |   | $ | 12,529,000 |   |   | $ | (351,000 | ) |
| Obligations      of state and                                                        |   |                     |       |   |                     |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   political      subdivisions                                              |   |                     | 4,504,000  |   |                     |   | (69,000  | )      |   |   | 401,000 |   |   |   | (15,000 | ) |   |   | 4,905,000 |   |   |   | (84,000 | ) |
| Mortgage-backed                                                                      |   |                     |       |   |                     |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   securities      - residential                                            |   |                     | 1,949,000  |   |                     |   | (25,000  | )      |   |   | - |   |   |   | - |   |   |   | 1,949,000 |   |   |   | (25,000 | ) |
|      Total      temporarily                                 |   |                     |       |   |                     |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           impaired      securities |   | $                        | 18,982,000 |   |                     | $      | (445,000 | )      |   | $ | 401,000 |   |   | $ | (15,000 | ) |   | $ | 19,383,000 |   |   | $ | (460,000 | ) |
|                                                                                 |   |                     |       |   |                     |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Index

|                                           |                           |   | March      31, |        |   | December      31, |        |
|------------------------------------------------|--------------------------------|--------|----------------|-------------|--------|-------------------|-------------|
|                                           |                           |   | 2010           |        |   | 2009              |        |
|                                           |                           |   |           |        |   |              |        |
| Mortgage                                       |                           |   |           |        |   |              |
|                                           | Residential                    |   | $              | 34,904,000  |   |              | $           | 36,246,000 |   |
|                                           | Commercial                     |   |           | 250,819,000 |   |              |        | 246,212,000 |   |
| Commercial                                     |                           |   | 115,646,000    |        |   |              | 114,893,000 |   |
| Home      Equity                               |                           |   | 21,300,000     |        |   |              | 21,779,000  |   |
| Installment                                    |                           |   | 38,897,000     |        |   |              | 41,006,000  |   |
| Other                                          |                           |   |           | 311,000     |   |              |        | 340,000 |   |
|                                           |   Total      loans   |   |           | 461,877,000 |   |              |        | 460,476,000 |   |
|                                           |                           |   |           |        |   |              |        |   |   |
| Less:   Deferred      loan fees |                           |   | 422,000        |        |   |              | 437,000     |   |
|                                           | Allowance      for loan losses |   |           | 8,174,000   |   |              |        | 6,920,000 |   |
|                                           |                           |   |           | 8,596,000   |   |              |        | 7,357,000 |   |
|                                           |                           |   |           |        |   |              |        |   |   |
|                                           | Loans,      net                |   | $              | 453,281,000 |   |              | $           | 453,119,000 |   |

----

Index

|                                 |   | Three      Months Ended March 31, |      |
|--------------------------------------|--------|-----------------------------------|-----------|
|                                 |   | 2010                              |      |   | 2009 |   |
|                                 |   |                              |      |   |   |   |
| Balance,      beginning of period    |   | $                                 | 6,920,000 |   |   | $ | 5,166,000 |   |
| Provision      charged to operations |   |                              | 1,550,000 |   |   |   | 150,000 |   |
| Recoveries      of loans charged off |   |                              | 73,000    |   |   |   | 87,000 |   |
| Loans      charged off               |   |                              | (369,000  | ) |   |   | (79,000 | ) |
|                                 |   |                              |      |   |   |   |   |   |
| Balance,      end of period          |   | $                                 | 8,174,000 |   |   | $ | 5,324,000 |   |

|                                                  |   | March      31, |       |   | December      31, |   |
|-------------------------------------------------------|--------|----------------|------------|--------|-------------------|--------|
|                                                  |   | 2010           |       |   | 2009              |   |
|                                                  |   |           |       |   |              |   |
| Nonaccrual      loans                                 |   | $              | 19,525,000 |   |              | $      | 19,656,000 |   |
| Loans      past due 90 days or more and accruing      |   |           | -          |   |              |   | 415,000 |   |
| Restructured      loans                               |   |           | 2,775,000  |   |              |   | 2,846,000 |   |
|     Total      nonperfoming loans |   | $              | 22,300,000 |   |              | $      | 22,917,000 |   |

|                                                                   |   | March      31, |       |   | December      31, |   |
|------------------------------------------------------------------------|--------|----------------|------------|--------|-------------------|--------|
|                                                                   |   | 2010           |       |   | 2009              |   |
|                                                                   |   |           |       |   |              |   |
| Impaired      loans                                                    |   |           |       |   |              |   |
|     With      related allowance for loan losses    |   | $              | 15,453,000 |   |              | $      | 8,668,000 |   |
|     Without      related allowance for loan losses |   |           | 6,847,000  |   |              |   | 13,834,000 |   |
| Total      impaired loans                                              |   | $              | 22,300,000 |   |              | $      | 22,502,000 |   |
|                                                                   |   |           |       |   |              |   |   |   |
| Related      allowance for loan losses                                 |   | $              | 2,876,000  |   |              | $      | 1,903,000 |   |

----

Index

|   | Notional      amount | $      7,000,000              |
|--------|----------------------|-------------------------------|
|   | Pay      rate        | 7.00%                         |
|   | Receive      rate    | 3      month LIBOR plus 2.95% |
|   | Maturity             | March      17, 2016           |
|   | Unrealized      loss | $432,000                      |
|   |                 |                          |

|                              |   | Amount      of Loss, Net of Taxes,        |    |
|-----------------------------------|--------|-------------------------------------------|---------|
|                              |   | Recognized      in OCI on Derivative      |    |
| Cash Flow Hedging    Relationship |   | (Effective      Portion)                  |    |
|                              |   | For      the three months ended March 31, |    |
|                              |   | 2010                                      |    |   | 2009 |   |
|                              |   |                                      |    |   |   |   |
| Cash      flow hedge              |   | $                                         | 105,000 |   |   | $ | - |   |
|                              |   |                                      |    |   |   |   |   |   |

----

Index

|                               |   | Fair      Value Measurements Using: |       |
|------------------------------------|--------|-------------------------------------|------------|
|                               |   |                                |       |   | Quoted      Prices in |   |   | Significant |   |   |   |   |
|                               |   |                                |       |   | Active      Markets |   |   | Other |   |   | Significant |   |
|                               |   |                                |       |   | for      Identical |   |   | Observable |   |   | Unobservable |   |
|                               |   | Carrying                            |       |   | Assets |   |   | Inputs |   |   | Inputs |   |
|                               |   | Value                               |       |   | (Level      1) |   |   | (Level      2) |   |   | (Level      3) |   |
|                               |   | At      March 31, 2010              |       |
| Assets:                            |   |                                |       |   |   |   |   |   |   |   |   |   |
| Available      for sale securities |   |                                |       |   |   |   |   |   |   |   |   |   |
| U.S.      government -             |   |                                |       |   |   |   |   |   |   |   |   |   |
| sponsered      agencies            |   | $                                   | 31,562,000 |   |   | $ | - |   |   | $ | 31,562,000 |   |   | $ | - |   |
| Obligations      of state and      |   |                                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| political      subdivisions        |   |                                | 5,427,000  |   |   |   | - |   |   |   | 5,427,000 |   |   |   | - |   |
| Mortgage-backed                    |   |                                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| securities      - residential      |   |                                | 53,782,000 |   |   |   | - |   |   |   | 53,782,000 |   |   |   | - |   |
| Other      equity investments      |   |                                | 3,155,000  |   |   |   | - |   |   |   | 3,155,000 |   |   |   | - |   |
| Total      available for           |   |                                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   sale      securities   |   | $                                   | 93,926,000 |   |   | $ | - |   |   | $ | 93,926,000 |   |   | $ | - |   |
|                               |   |                                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                       |   |                                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      rate swap            |   | $                                   | 432,000    |   |   | $ | - |   |   | $ | 432,000 |   |   | $ | - |   |
|                               |   |                                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                               |   | At      December 31, 2009 |        |
|------------------------------------|--------|---------------------------|-------------|
| Assets:                            |   |                      |        |   |   |   |   |   |   |   |   |   |
| Available      for sale securities |   |                      |        |   |   |   |   |   |   |   |   |   |
| U.S.      government -             |   |                      |        |   |   |   |   |   |   |   |   |   |
| sponsered      agencies            |   | $                         | 32,286,000  |   |   | $ | - |   |   | $ | 32,286,000 |   |   | $ | - |   |
| Obligations      of state and      |   |                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| political      subdivisions        |   |                      | 5,397,000   |   |   |   | - |   |   |   | 5,397,000 |   |   |   | - |   |
| Mortgage-backed                    |   |                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| securities      - residential      |   |                      | 62,228,000  |   |   |   | - |   |   |   | 62,228,000 |   |   |   | - |   |
| Other      equity investments      |   |                      | 3,115,000   |   |   |   | - |   |   |   | 3,115,000 |   |   |   | - |   |
| Total      available for           |   |                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   sale      securities   |   | $                         | 103,026,000 |   |   | $ | - |   |   | $ | 103,026,000 |   |   | $ | - |   |
|                               |   |                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                       |   |                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      rate swap            |   | $                         | 258,000     |   |   | $ | - |   |   | $ | 258,000 |   |   | $ | - |   |

----

Index

|                |   |                      |       |   | Fair      Vaule Measurements Using: |   |
|---------------------|--------|---------------------------|------------|--------|-------------------------------------|--------|
|                |   |                      |       |   | Quoted      Prices                  |   |   | Significant |   |   |   |   |
|                |   |                      |       |   | in      Active                      |   |   | Other |   |   | Significant |   |
|                |   |                      |       |   | Markets      for                    |   |   | Observabel |   |   | Unobservable |   |
|                |   | Carrying                  |       |   | Identical      Assets               |   |   | Inputs |   |   | Inputs |   |
|                |   | Value                     |       |   | (Level      1)                      |   |   | (Level      2) |   |   | (Level      3) |   |
|                |   | At      March 31, 2010    |       |
| Assets:             |   |                      |       |   |                                |   |   |   |   |   |   |   |
| Impaired      loans |   | $                         | 12,577,000 |   |                                | $      | - |   |   | $ | - |   |   | $ | 12,577,000 |   |
|                |   |                      |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                |   | At      December 31, 2009 |       |
| Assets:             |   |                      |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Impaired      loans |   | $                         | 6,765,000  |   |                                | $      | - |   |   | $ | - |   |   | $ | 6,765,000 |   |

|                                       |   | March      31, 2010         |        |   | December      31, 2009 |   |
|--------------------------------------------|--------|-----------------------------|-------------|--------|------------------------|--------|
|                                       |   | Carrying                    |        |   | Estimated              |   |   | Carrying |   |   | Estimated |   |
|                                       |   | Amount                      |        |   | Fair      Value        |   |   | Amount |   |   | Fair      Value |   |
|                                       |   | (Dollars      in thousands) |        |
| Financial      assets:                     |   |                        |        |   |                   |   |   |   |   |   |   |   |
| Cash      and cash equivalents             |   | $                           | 12,196,000  |   |                   | $      | 12,196,000 |   |   | $ | 8,871,000 |   |   | $ | 8,871,000 |   |
| Securities      available for sales        |   |                        | 93,926,000  |   |                   |   | 93,926,000 |   |   |   | 103,026,000 |   |   |   | 103,026,000 |   |
| Securities      held to maturity           |   |                        | 70,758,000  |   |                   |   | 72,611,000 |   |   |   | 67,717,000 |   |   |   | 68,765,000 |   |
| FHLB-NY      stock                         |   |                        | 2,390,000   |   |                   |   | N/A |   |   |   | 3,227,000 |   |   |   | N/A |   |
| Net      loans                             |   |                        | 453,281,000 |   |                   |   | 454,147,000 |   |   |   | 453,119,000 |   |   |   | 453,813,000 |   |
| Accrued      interest receivable           |   |                        | 3,045,000   |   |                   |   | 3,045,000 |   |   |   | 3,167,000 |   |   |   | 3,167,000 |   |
|                                       |   |                        |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Financial      liabilities:                |   |                        |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                   |   |                        | 542,930,000 |   |                   |   | 543,796,000 |   |   |   | 529,930,000 |   |   |   | 531,230,000 |   |
| FHLB-NY      Advances                      |   |                        | 36,000,000  |   |                   |   | 33,799,000 |   |   |   | 54,600,000 |   |   |   | 51,949,000 |   |
| Securities      sold under agreements      |   |                        |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|     to      repurchase |   |                        | 15,399,000  |   |                   |   | 15,399,000 |   |   |   | 15,396,000 |   |   |   | 15,396,000 |   |
| Subordinated      debenture                |   |                        | 7,217,000   |   |                   |   | 6,529,000 |   |   |   | 7,217,000 |   |   |   | 5,943,000 |   |
| Accrued      interest payable              |   |                        | 1,000,000   |   |                   |   | 1,000,000 |   |   |   | 1,193,000 |   |   |   | 1,193,000 |   |

----

Index

|                                             |   | Three      Months Ended                    |   |
|--------------------------------------------------|--------|--------------------------------------------|--------|
|                                             |   | March      31,                             |   |
|                                             |   | 2010                                       |   |   | 2009 |   |
|                                             |   | (in      thousands, except per share data) |   |
|                                             |   |                                       |   |   |   |   |
| Net      income                                  |   | $                                          | 871    |   |   | $ | 1,187 |   |
| Dividends      on preferred stock and accretion  |   |                                       | 137    |   |   |   | 92 |   |
| Net      income available to common stockholders |   | $                                          | 734    |   |   | $ | 1,095 |   |
|                                             |   |                                       |   |   |   |   |   |   |
| Weighted      average shares                     |   |                                       | 5,840  |   |   |   | 5,829 |   |
| Effect      of dilutive stock options            |   |                                       | 2      |   |   |   | 6 |   |
| Total      weighted average dilutive shares      |   |                                       | 5,842  |   |   |   | 5,835 |   |
|                                             |   |                                       |   |   |   |   |   |   |
| Basic      earnings per common share             |   | $                                          | 0.13   |   |   | $ | 0.19 |   |
|                                             |   |                                       |   |   |   |   |   |   |
| Diluted      earnings per common share           |   | $                                          | 0.13   |   |   | $ | 0.19 |   |

----

Index

n

----

Index

----

Index

| Analysis      of Net Interest Income (Unaudited)       |                        |
|--------------------------------------------------------|-----------------------------|
| For      the Three Months Ended March 31,              |                        |
|                                                   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   | 2010                        |   |   | 2009 |   |
|                                                   |                        |   |   |   |   |   |   | Average |   |   |   |   |   |   |   |   | Average |   |
|                                                   |                        |   |   |   | Interest |   |   | Rates |   |   |   |   |   | Interest |   |   | Rates |   |
|                                                   | Average                     |   |   | Income/ |   |   | Earned/ |   |   | Average |   |   | Income/ |   |   | Earned/ |   |
|                                                   | Balance                     |   |   | Expense |   |   | Paid |   |   | Balance |   |   | Expense |   |   | Paid |   |
|                                                   | (Dollars      in thousands) |   |
|                                                   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets                                                 |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning      assets:                          |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans      (1) (2)                                     |                        | $ | 462,022 |   |   | $ | 6,886 |   |   |   | 6.04 | % |   | $ | 436,926 |   |   | $ | 6,619 |   |   |   | 6.14 | % |
| Taxable      investment securities (1)                 |                        |   | 133,319 |   |   |   | 1,339 |   |   |   | 4.07 |   |   |   | 134,749 |   |   |   | 1,597 |   |   |   | 4.81 |   |
| Tax-exempt      investment securities (1) (2)          |                        |   | 32,307 |   |   |   | 412 |   |   |   | 5.17 |   |   |   | 28,938 |   |   |   | 390 |   |   |   | 5.47 |   |
| Other      interest-earning assets                     |                        |   | 120 |   |   |   | 2 |   |   |   | 6.76 |   |   |   | 84 |   |   |   | 3 |   |   |   | 9.66 |   |
| Total      interest-earning assets                     |                        |   | 627,768 |   |   |   | 8,639 |   |   |   | 5.58 |   |   |   | 600,697 |   |   |   | 8,609 |   |   |   | 5.81 |   |
|                                                   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-earning      assets:                      |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for loan losses                         |                        |   | (7,310 | ) |   |   |   |   |   |   |   |   |   |   | (5,214 | ) |   |   |   |   |   |   |   |   |
| Other      assets                                      |                        |   | 37,608 |   |   |   |   |   |   |   |   |   |   |   | 35,413 |   |   |   |   |   |   |   |   |   |
| Total      assets                                      |                        | $ | 658,066 |   |   |   |   |   |   |   |   |   |   | $ | 630,896 |   |   |   |   |   |   |   |   |   |
|                                                   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities      and Stockholders' Equity              |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                     |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      demand deposits                  |                        | $ | 222,691 |   |   | $ | 769 |   |   |   | 1.40 | % |   | $ | 167,280 |   |   | $ | 517 |   |   |   | 1.25 | % |
| Savings      deposits                                  |                        |   | 47,299 |   |   |   | 50 |   |   |   | 0.42 |   |   |   | 40,377 |   |   |   | 58 |   |   |   | 0.58 |   |
| Time      deposits                                     |                        |   | 171,333 |   |   |   | 1,001 |   |   |   | 2.37 |   |   |   | 211,891 |   |   |   | 1,797 |   |   |   | 3.44 |   |
| Repurchase      agreements                             |                        |   | 15,398 |   |   |   | 182 |   |   |   | 4.79 |   |   |   | 15,162 |   |   |   | 189 |   |   |   | 5.06 |   |
| FHLB      borrowing                                    |                        |   | 45,817 |   |   |   | 246 |   |   |   | 2.18 |   |   |   | 46,139 |   |   |   | 230 |   |   |   | 2.02 |   |
| Subordinated      debenture                            |                        |   | 7,217 |   |   |   | 68 |   |   |   | 3.82 |   |   |   | 7,217 |   |   |   | 84 |   |   |   | 4.72 |   |
| Total      interest-bearing liabilities                |                        |   | 509,755 |   |   |   | 2,316 |   |   |   | 1.84 |   |   |   | 488,066 |   |   |   | 2,875 |   |   |   | 2.39 |   |
| Non-interest-bearing      liabilities:                 |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand      deposits                                   |                        |   | 89,993 |   |   |   |   |   |   |   |   |   |   |   | 88,792 |   |   |   |   |   |   |   |   |   |
| Other      liabilities                                 |                        |   | 3,993 |   |   |   |   |   |   |   |   |   |   |   | 4,562 |   |   |   |   |   |   |   |   |   |
| Stockholders'      equity                              |                        |   | 54,325 |   |   |   |   |   |   |   |   |   |   |   | 49,476 |   |   |   |   |   |   |   |   |   |
| Total      liabilities and stockholders' equity        |                        | $ | 658,066 |   |   |   |   |   |   |   |   |   |   | $ | 630,896 |   |   |   |   |   |   |   |   |   |
|                                                   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income (taxable equivalent basis)    |                        |   |   |   |   |   | 6,323 |   |   |   |   |   |   |   |   |   |   |   | 5,734 |   |   |   |   |   |
| Tax      Equivalent adjustment                         |                        |   |   |   |   |   | (144 | ) |   |   |   |   |   |   |   |   |   |   | (136 | ) |   |   |   |   |
| Net      interest income                               |                        |   |   |   |   | $ | 6,179 |   |   |   |   |   |   |   |   |   |   | $ | 5,598 |   |   |   |   |   |
|                                                   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest spread (taxable equivalent basis)    |                        |   |   |   |   |   |   |   |   |   | 3.74 | % |   |   |   |   |   |   |   |   |   |   | 3.42 | % |
|                                                   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      yield on interest-earning                     |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   assets      (taxable equivalent basis) (3) |                        |   |   |   |   |   |   |   |   |   | 4.08 | % |   |   |   |   |   |   |   |   |   |   | 3.87 | % |
|                                                   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|      (1)     For      purpose of these calculations, nonaccruing loans are included in the      average balance.  Loans and                             |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                total      interest-earning assets are net of unearned income.  Securities      are included at amortized cost. |   |   |   |
|      (2)     The      tax equivalent adjustments are based on a marginal tax rate of      34%.                                                                    |   |   |   |   |   |   |   |   |   |   |
|      (3)     Net      interest income (taxable equivalent basis) divided by average      interest-earning assets.                                                 |   |   |   |   |   |   |

----

Index

----

Index

|                                                 |   | March      31, |   |   | December      31, |   |   | September      30, |   |   | June      30, |   |
|------------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|--------|--------------------|--------|--------|---------------|--------|
|                                                 |   | 2010           |   |   | 2009              |   |   | 2009               |   |   | 2009          |   |
|                                                 |   |           |   |   |              |   |   |               |   |   |          |   |
| Nonaccrual      loans (1)                            |   | $              | 19,525 |   |              | $      | 19,656 |               |   | $      | 14,536        |   |   | $ | 11,533 |   |
| Loans      past due 90 days or more and accruing (2) |   |           | -      |   |              |   | 415    |               |   |   | 728           |   |   |   | - |   |
| Total      nonperforming loans                       |   |           | 19,525 |   |              |   | 20,071 |               |   |   | 15,264        |   |   |   | 11,533 |   |
|                                                 |   |           |   |   |              |   |   |               |   |   |          |   |   |   |   |   |
| Restructured      loans                              |   |           | 2,775  |   |              |   | 2,846  |               |   |   | 2,417         |   |   |   | 2,460 |   |
|                                                 |   |           |   |   |              |   |   |               |   |   |          |   |   |   |   |   |
| Total      nonperforming loans                       |   | $              | 22,300 |   |              | $      | 22,917 |               |   | $      | 17,681        |   |   | $ | 13,993 |   |
|                                                 |   |           |   |   |              |   |   |               |   |   |          |   |   |   |   |   |
| Allowance      for loan losses                       |   | $              | 8,174  |   |              | $      | 6,920  |               |   | $      | 7,249         |   |   | $ | 6,342 |   |
|                                                 |   |           |   |   |              |   |   |               |   |   |          |   |   |   |   |   |
| Nonperforming      loans to total gross loans        |   |           | 4.83   | %      |              |   | 4.98   | %                  |   |   | 3.92          | %      |   |   | 3.18 | % |
| Nonperforming      loans to total assets             |   |           | 3.37   | %      |              |   | 3.45   | %                  |   |   | 2.72          | %      |   |   | 2.19 | % |
| Allowance      for loan losses to total gross loans  |   |           | 1.77   | %      |              |   | 1.50   | %                  |   |   | 1.61          | %      |   |   | 1.44 | % |
| Allowance      for loan losses to                    |   |           |   |   |              |   |   |               |   |   |          |   |   |   |   |   |
| nonperforming      loans                             |   |           | 36.65  | %      |              |   | 30.20  | %                  |   |   | 41.00         | %      |   |   | 45.32 | % |

----

Index

|                    |   | Required |   |   | Actual |   |   | Excess |   |
|-------------------------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
|                    |   |     |   |   |   |   |   |   |   |
| Leverage      Ratio     |   |     | 4.00   | %      |   |   | 9.17   | %      |   |   | 5.17 | % |
| Risk-based      Capital |   |     |   |   |   |   |   |   |   |   |   |   |
| Tier      1             |   |     | 4.00   | %      |   |   | 12.03  | %      |   |   | 8.03 | % |
| Total                   |   |     | 8.00   | %      |   |   | 13.28  | %      |   |   | 5.28 | % |

----

Index

----

Index

o

e

|   | (a) | Evaluation      of internal controls and procedures |
|--------|-----|-----------------------------------------------------|

|   | (b) | Management’s      Report on Internal Control over Financial  Reporting |
|--------|-----|------------------------------------------------------------------------------|

|   | (c) | Changes      in Internal Controls over FinancialReporting |
|--------|-----|-----------------------------------------------------------|

----

Index

p

e

----

Index

T

|                               | Stewardship      Financial Corporation |
|------------------------------------|----------------------------------------|
|                               |                                   |   |
|                               |                                   |   |
| Date:  May      14, 2010 | By:                                    | /s/      Paul Van Ostenbridge |
|                               |                                   | Paul      Van Ostenbridge |
|                               |                                   | President      and Chief Executive Officer |
|                               |                                   | (Principal      Executive Officer) |
|                               |                                   |   |
|                               |                                   |   |
|                               |                                   |   |
|                               |                                   |   |
| Date:  May      14, 2010 | By:                                    | /s/      Claire M. Chadwick |
|                               |                                   | Claire      M. Chadwick |
|                               |                                   | Senior      Vice President and Chief Financial Officer |
|                               |                                   | (Principal      Financial and Accounting Officer) |

----

Index

I

| ExhibitNumber |   |  Description      of Exhibits                                                                                                      |
|---------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
|          |   |                                                                                                                                    |
| 31.1          |   | Certification      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002                            |
| 31.2          |   | Certification      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002                            |
| 32.1          |   | Certification      of Chief Executive Officer and Chief Financial Officer pursuant to Section      906 of the Sarbanes-Oxley Act of2002 |