**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C.  20549**

**FORM      10-Q**

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

| o | TRANSITION                REPORT PURSUANT TO 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 area code)                                        |
|                                                                                                             |   |   |
|                                                                                                             |
| (Former                name, former address and former fiscal year, if changed since last                report) |

| Large                accelerated filer o | Accelerated                filer o | Non-accelerated                filer ý |
|------------------------------------------|------------------------------------|---------------------------------------------|

----

----

**Stewardship      Financial Corporation**

**INDEX**

|                                                                                                                                                                                      | **PAGE**                             |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|
|                                                                                                                                                                                      | **NUMBER**                           |
| **PART                I  -  CONSOLIDATED FINANCIAL                INFORMATION**                                                                                       |                                 |
|                                                                                                                                                                                      |                                 |
| **ITEM                1  -   CONSOLIDATED FINANCIAL                STATEMENTS**                                                                                  |                                 |
|                                                                                                                                                                                      |                                 |
| Consolidated                  Statements of Financial Condition at September 30, 2007 (Unaudited)                  and December 31, 2006                                                  | 1                                    |
|                                                                                                                                                                                      |                                 |
| Consolidated                Statements of Income for the Nine Months ended                September 30, 2007 and 2006 (Unaudited)                                                         | 2                                    |
|                                                                                                                                                                                      |                                 |
| Consolidated                Statements of Income for the Three Months ended                September 30, 2007 and 2006 (Unaudited)                                                        | 3                                    |
|                                                                                                                                                                                      |                                 |
| Consolidated                Statements of Cash Flows for the Nine Months ended                September 30, 2007 and 2006 (Unaudited)                                                     | 4                                    |
|                                                                                                                                                                                      |                                 |
| Consolidated                Statement of Changes in Stockholders’ Equity for                the Nine Months ended  September 30, 2007 and 2006                (Unaudited) | 5                                    |
|                                                                                                                                                                                      |                                 |
| Notes                to Consolidated Financial Statements                (Unaudited)                                                                                                      | 6                -                13 |
|                                                                                                                                                                                      |                                 |
| **ITEM                2  -   MANAGEMENT’S DISCUSSION                AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**                        | 14                - 26               |
|                                                                                                                                                                                      |                                 |
| **ITEM                3 -   QUANTITATIVE AND QUALITATIVE                DISCLOSURE ABOUT MARKET RISK**                                                                     | 27                                   |
|                                                                                                                                                                                      |                                 |
| **ITEM                4 -    CONTROLS AND                PROCEDURES**                                                                                                 | 27                                   |
|                                                                                                                                                                                      |                                 |
| **PART                II  -  OTHER                INFORMATION**                                                                                                       |                                 |
|                                                                                                                                                                                      |                                 |
| **ITEM                1A.  RISK FACTORS**                                                                                                                                       | 28                                   |
|                                                                                                                                                                                      |                                 |
| **ITEM                6 – EXHIBITS**                                                                                                                                                | 28                                   |
|                                                                                                                                                                                      |                                 |
| **SIGNATURES**                                                                                                                                                                            | 29                                   |
|                                                                                                                                                                                      |                                 |
| **EXHIBIT                INDEX**                                                                                                                                                          | 30                –33          |
|                                                                                                                                                                                      |                                 |

----

*Index*

| **Stewardship                Financial Corporation and                Subsidiary**                        |
|-----------------------------------------------------------------------------------------------------------|
| **Consolidated                Statements of Financial                Condition**                          |
| **(Unaudited)**                                                                                           |
|                                                                                                      |   |   |   |   |   |   |
|                                                                                                      |   |   |   |   |   |   |
|                                                                                                      |   | **September                30,** |   |   | **December                31,** |   |
|                                                                                                      |   | **2007** |   |   | **2006** |   |
|                                                                                                      |   |   |   |   |   |   |
| **Assets**                                                                                                |   |   |   |   |   |   |
|                                                                                                      |   |   |   |   |   |   |
| Cash                and due from banks                                                                    |   | $ | 9,999,000 |   |   | $ | 14,861,000 |   |
| Other                interest-earning assets                                                              |   |   | 49,000 |   |   |   | 836,000 |   |
|        Cash                and cash equivalents                        |   |   | 10,048,000 |   |   |   | 15,697,000 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
| Securities                available for sale                                                              |   |   | 79,654,000 |   |   |   | 72,746,000 |   |
| Securities                held to maturity; estimated fair value                                          |   |   |   |   |   |   |   |   |
|     of                $39,695,000 (2007) and $38,881,000 (2006)                       |   |   | 39,911,000 |   |   |   | 39,163,000 |   |
| FHLB-NY                stock, at cost                                                                     |   |   | 1,605,000 |   |   |   | 1,899,000 |   |
| Loans,                net of allowance for loan losses of                                                 |   |   |   |   |   |   |   |   |
|     of                $ 4,249,000 (2007) and $4,101,000 (2006)                        |   |   | 391,345,000 |   |   |   | 365,443,000 |   |
| Mortgage                loans held for sale                                                               |   |   | 1,387,000 |   |   |   | 2,155,000 |   |
| Premises                and equipment, net                                                                |   |   | 7,667,000 |   |   |   | 7,098,000 |   |
| Accrued                interest receivable                                                                |   |   | 3,193,000 |   |   |   | 2,912,000 |   |
| Intangible                assets                                                                          |   |   | 78,000 |   |   |   | 102,000 |   |
| Other                real estate                                                                          |   |   | 353,000 |   |   |   | - |   |
| Bank                owned life insurance                                                                  |   |   | 8,192,000 |   |   |   | 8,522,000 |   |
| Other                assets                                                                               |   |   | 3,750,000 |   |   |   | 4,012,000 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
|        Total                assets                                     |   | $ | 547,183,000 |   |   | $ | 519,749,000 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
| **Liabilities                and stockholders' equity**                                                   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
| **Liabilities**                                                                                           |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                 |   |   |   |   |   |   |   |   |
|     Noninterest-bearing                                                               |   | $ | 96,397,000 |   |   | $ | 92,105,000 |   |
|     Interest-bearing                                                                  |   |   | 362,174,000 |   |   |   | 342,118,000 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
|         Total                deposits                             |   |   | 458,571,000 |   |   |   | 434,223,000 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
| Other                borrowings                                                                           |   |   | 20,262,000 |   |   |   | 27,892,000 |   |
| Subordinated                debentures                                                                    |   |   | 7,217,000 |   |   |   | 7,217,000 |   |
| Securities                sold under agreements to repurchase                                             |   |   | 16,804,000 |   |   |   | 9,023,000 |   |
| Accrued                interest payable                                                                   |   |   | 1,928,000 |   |   |   | 1,721,000 |   |
| Accrued                expenses and other liabilities                                                     |   |   | 2,321,000 |   |   |   | 2,367,000 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
|         Total                liabilities                          |   |   | 507,103,000 |   |   |   | 482,443,000 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
| Commitments                and contingencies                                                              |   |   | - |   |   |   | - |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
| **Stockholders'                equity**                                                                   |   |   |   |   |   |   |   |   |
| Common                stock, no par value; 10,000,000 shares authorized;                                  |   |   |   |   |   |   |   |   |
|      5,314,142                and 5,268,815 shares issued and outstanding at     |   |   |   |   |   |   |   |   |
|     September                30, 2007 and December 31, 2006, respectively.            |   |   | 34,994,000 |   |   |   | 31,148,000 |   |
| Retained                earnings                                                                          |   |   | 5,535,000 |   |   |   | 6,750,000 |   |
| Treasury                stock; 8,232 shares outstanding at September 30, 2007.                            |   |   | (112,000 | ) |   |   | - |   |
| Accumulated                other comprehensive loss                                                       |   |   | (337,000 | ) |   |   | (592,000 | ) |
|                                                                                                      |   |   |   |   |   |   |   |   |
|         Total                stockholders' equity                 |   |   | 40,080,000 |   |   |   | 37,306,000 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
|         Total                liabilities and stockholders' equity |   | $ | 547,183,000 |   |   | $ | 519,749,000 |   |

|                                                                     |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| See                notes to unaudited consolidated financial statements. |   |   |   |   |   |   |   |   |

----

*Index*

| **Stewardship                  Financial Corporation and Subsidiary**                                  |
|-------------------------------------------------------------------------------------------------------------|
| **Consolidated                  Statements of Income**                                                 |
| **(Unaudited)**                                                                                        |
|                                                                                                        |   |   |   |   |   |   |
|                                                                                                        |   |   |   |   |   |   |
|                                                                                                        |   | **Nine                  Months Ended** |   |
|                                                                                                        |   | **September                  30,** |   |
|                                                                                                        |   | **2007** |   |   | **2006** |   |
| Interest                  income:                                                                           |   |   |   |   |   |   |
|      Loans                                                                         |   | $ | 20,289,000 |   |   | $ | 18,963,000 |   |
|      Securities                  held to maturity                                  |   |   |   |   |   |   |   |   |
|        Taxable                                                           |   |   | 691,000 |   |   |   | 663,000 |   |
|        Non-taxable                                                       |   |   | 551,000 |   |   |   | 394,000 |   |
|      Securities                  available for sale                                |   |   |   |   |   |   |   |   |
|        Taxable                                                           |   |   | 2,868,000 |   |   |   | 1,962,000 |   |
|        Non-taxable                                                       |   |   | 50,000 |   |   |   | 23,000 |   |
|      FHLB                  dividends                                               |   |   | 87,000 |   |   |   | 77,000 |   |
|      Other                  interest-earning assets                                |   |   | 39,000 |   |   |   | 29,000 |   |
|           Total                  interest income          |   |   | 24,575,000 |   |   |   | 22,111,000 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Interest                  expense:                                                                          |   |   |   |   |   |   |   |   |
|      Deposits                                                                      |   |   | 8,810,000 |   |   |   | 6,188,000 |   |
|      Borrowed                  money                                               |   |   | 1,378,000 |   |   |   | 1,619,000 |   |
|           Total                  interest expense         |   |   | 10,188,000 |   |   |   | 7,807,000 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Net                  interest income before provision for loan losses                                       |   |   | 14,387,000 |   |   |   | 14,304,000 |   |
| Provision                  for loan losses                                                                  |   |   | 280,000 |   |   |   | 250,000 |   |
| Net                  interest income after provision for loan losses                                        |   |   | 14,107,000 |   |   |   | 14,054,000 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Noninterest                  income:                                                                        |   |   |   |   |   |   |   |   |
|      Fees                  and service charges                                     |   |   | 1,160,000 |   |   |   | 1,247,000 |   |
|      Bank                  owned life insurance                                    |   |   | 240,000 |   |   |   | 233,000 |   |
|      Gain                  on sales of mortgage loans                              |   |   | 259,000 |   |   |   | 165,000 |   |
|      Merchant                  processing                                          |   |   | 1,070,000 |   |   |   | 884,000 |   |
|  Life                  insurance proceeds                                                         |   |   |  459,000 |   |   |   |  - |   |
|      Miscellaneous                                                                 |   |   | 229,000 |   |   |   | 357,000 |   |
|            Total                  noninterest income |   |   | 3,417,000 |   |   |   | 2,886,000 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Noninterest                  expenses:                                                                      |   |   |   |   |   |   |   |   |
|      Salaries                  and employee benefits                               |   |   | 5,425,000 |   |   |   | 5,045,000 |   |
|      Occupancy,                  net                                               |   |   | 1,122,000 |   |   |   | 982,000 |   |
|      Equipment                                                                     |   |   | 696,000 |   |   |   | 690,000 |   |
|      Data                  processing                                              |   |   | 869,000 |   |   |   | 880,000 |   |
|      Advertising                                                                   |   |   | 311,000 |   |   |   | 283,000 |   |
|      FDIC                  insurance premium                                       |   |   | 50,000 |   |   |   | 38,000 |   |
|      Amortization                  of intangible assets                            |   |   | 24,000 |   |   |   | 29,000 |   |
|      Charitable                  contributions                                     |   |   | 546,000 |   |   |   | 543,000 |   |
|      Other                  real estate expense                                    |   |   | 37,000 |   |   |   |   |   |
|      Stationery                  and supplies                                      |   |   | 256,000 |   |   |   | 240,000 |   |
|      Merchant                  processing                                          |   |   | 965,000 |   |   |   | 801,000 |   |
|      Bank-card                  related services                                   |   |   | 240,000 |   |   |   | 368,000 |   |
|      Miscellaneous                                                                 |   |   | 1,509,000 |   |   |   | 1,611,000 |   |
|           Total                  noninterest expenses     |   |   | 12,050,000 |   |   |   | 11,510,000 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Income                  before income tax expense                                                           |   |   | 5,474,000 |   |   |   | 5,430,000 |   |
| Income                  tax expense                                                                         |   |   | 1,705,000 |   |   |   | 1,929,000 |   |
| Net                  income                                                                                 |   | $ | 3,769,000 |   |   | $ | 3,501,000 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Basic                  earnings per share                                                                   |   | $ | 0.71 |   |   | $ | 0.66 |   |
| Diluted                  earnings per share                                                                 |   | $ | 0.71 |   |   | $ | 0.66 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Weighted                  average number of common shares outstanding                                       |   |   | 5,289,047 |   |   |   | 5,270,688 |   |
| Weighted                  average number of diluted common                                                  |   |   |   |   |   |   |   |   |
|      shares                  outstanding                                           |   |   | 5,317,745 |   |   |   | 5,321,844 |   |

|                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Share                  data has been restated to reflect a 5% stock dividend paid November                  15,                  2006 and a 5% stock dividend payable                  November 15, 2007. |   |
|                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| See                  notes to unaudited consolidated financial statements.                                                                                                                                |   |   |   |   |   |   |   |   |

----

*Index*

|                                                                                                        |   |                                    |      |   |     |   |
|-------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|-----------|--------|----------|--------|
|                                                                                                        |   |                                    |      |   |     |   |
| **Stewardship                  Financial Corporation and Subsidiary**                                  |
| **Consolidated                  Statements of Income**                                                 |
| **(Unaudited)**                                                                                        |
|                                                                                                        |   |                                    |      |   |     |   |
|                                                                                                        |   |                                    |      |   |     |   |
|                                                                                                        |   | **Three                  Months Ended** |      |
|                                                                                                        |   | **September                  30,**      |      |
|                                                                                                        |   | **2007**                                |      |   | **2006** |   |
| Interest                  income:                                                                           |   |                                    |      |   |     |   |
|      Loans                                                                         |   | $                                       | 7,004,000 |   |     | $      | 6,685,000 |   |
|      Securities                  held to maturity                                  |   |                                    |      |   |     |   |   |   |
|        Taxable                                                           |   |                                    | 227,000   |   |     |   | 223,000 |   |
|        Non-taxable                                                       |   |                                    | 195,000   |   |     |   | 157,000 |   |
|      Securities                  available for sale                                |   |                                    |      |   |     |   |   |   |
|        Taxable                                                           |   |                                    | 1,031,000 |   |     |   | 677,000 |   |
|        Non-taxable                                                       |   |                                    | 20,000    |   |     |   | 10,000 |   |
|      FHLB                  dividends                                               |   |                                    | 29,000    |   |     |   | 30,000 |   |
|      Other                  interest-earning assets                                |   |                                    | 20,000    |   |     |   | 11,000 |   |
|           Total                  interest income          |   |                                    | 8,526,000 |   |     |   | 7,793,000 |   |
|                                                                                                        |   |                                    |      |   |     |   |   |   |
| Interest                  expense:                                                                          |   |                                    |      |   |     |   |   |   |
|      Deposits                                                                      |   |                                    | 3,189,000 |   |     |   | 2,396,000 |   |
|      Borrowed                  money                                               |   |                                    | 425,000   |   |     |   | 532,000 |   |
|           Total                  interest expense         |   |                                    | 3,614,000 |   |     |   | 2,928,000 |   |
|                                                                                                        |   |                                    |      |   |     |   |   |   |
| Net                  interest income before provision for loan losses                                       |   |                                    | 4,912,000 |   |     |   | 4,865,000 |   |
| Provision                  for loan losses                                                                  |   |                                    | 90,000    |   |     |   | 90,000 |   |
| Net                  interest income after provision for loan losses                                        |   |                                    | 4,822,000 |   |     |   | 4,775,000 |   |
|                                                                                                        |   |                                    |      |   |     |   |   |   |
| Noninterest                  income:                                                                        |   |                                    |      |   |     |   |   |   |
|      Fees                  and service charges                                     |   |                                    | 375,000   |   |     |   | 419,000 |   |
|      Bank                  owned life insurance                                    |   |                                    | 80,000    |   |     |   | 79,000 |   |
|      Gain                  on sales of mortgage loans                              |   |                                    | 73,000    |   |     |   | 70,000 |   |
|      Merchant                  processing                                          |   |                                    | 353,000   |   |     |   | 322,000 |   |
|      Miscellaneous                                                                 |   |                                    | 34,000    |   |     |   | 94,000 |   |
|            Total                  noninterest income |   |                                    | 915,000   |   |     |   | 984,000 |   |
|                                                                                                        |   |                                    |      |   |     |   |   |   |
| Noninterest                  expenses:                                                                      |   |                                    |      |   |     |   |   |   |
|      Salaries                  and employee benefits                               |   |                                    | 1,781,000 |   |     |   | 1,713,000 |   |
|      Occupancy,                  net                                               |   |                                    | 406,000   |   |     |   | 375,000 |   |
|      Equipment                                                                     |   |                                    | 239,000   |   |     |   | 201,000 |   |
|      Data                  processing                                              |   |                                    | 240,000   |   |     |   | 309,000 |   |
|      Advertising                                                                   |   |                                    | 111,000   |   |     |   | 82,000 |   |
|      FDIC                  insurance premium                                       |   |                                    | 24,000    |   |     |   | 12,000 |   |
|      Amortization                  of intangible assets                            |   |                                    | 8,000     |   |     |   | 10,000 |   |
|      Charitable                  contributions                                     |   |                                    | 178,000   |   |     |   | 181,000 |   |
|      Other                  real estate owned                                      |   |                                    | 37,000    |   |     |   | - |   |
|      Stationery                  and supplies                                      |   |                                    | 63,000    |   |     |   | 87,000 |   |
|      Merchant                  processing                                          |   |                                    | 315,000   |   |     |   | 287,000 |   |
|      Bank-card                  related services                                   |   |                                    | 71,000    |   |     |   | 124,000 |   |
|      Miscellaneous                                                                 |   |                                    | 400,000   |   |     |   | 488,000 |   |
|           Total                  noninterest expenses     |   |                                    | 3,873,000 |   |     |   | 3,869,000 |   |
|                                                                                                        |   |                                    |      |   |     |   |   |   |
| Income                  before income tax expense                                                           |   |                                    | 1,864,000 |   |     |   | 1,890,000 |   |
| Income                  tax expense                                                                         |   |                                    | 635,000   |   |     |   | 665,000 |   |
| Net                  income                                                                                 |   | $                                       | 1,229,000 |   |     | $      | 1,225,000 |   |
|                                                                                                        |   |                                    |      |   |     |   |   |   |
| Basic                  earnings per share                                                                   |   | $                                       | 0.23      |   |     | $      | 0.23 |   |
| Diluted                  earnings per share                                                                 |   | $                                       | 0.23      |   |     | $      | 0.23 |   |
|                                                                                                        |   |                                    |      |   |     |   |   |   |
| Weighted                  average number of common shares outstanding                                       |   |                                    | 5,304,678 |   |     |   | 5,294,369 |   |
| Weighted                  average number of diluted common                                                  |   |                                    |      |   |     |   |   |   |
|      shares                  outstanding                                           |   |                                    | 5,321,768 |   |     |   | 5,337,407 |   |

|                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Share                  data has been restated to reflect a 5% stock dividend paid November                  15,                  2006 and a 5% stock dividend payable                  November 15, 2007. |   |
|                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| See                  notes to unaudited consolidated financial statements.                                                                                                                                |   |   |   |   |   |   |   |   |

----

*Index*

| **Stewardship                    Financial Corporation and Subsidiary**                                                                                       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Consolidated                    Statements of Cash Flows**                                                                                                  |
| **(Unaudited)**                                                                                                                                               |
|                                                                                                                                                               |   |   |   |   |   |   |
|                                                                                                                                                               |   | **Nine                    Months Ended** |   |
|                                                                                                                                                               |   | **September                    30,** |   |
|                                                                                                                                                               |   | **2007** |   |   | **2006** |   |
| **Cash                    flows from operating activities:**                                                                                                       |   |   |   |   |   |   |
| Net                    income                                                                                                                                      |   | $ | 3,769,000 |   |   | $ | 3,501,000 |   |
| Adjustments                    to reconcile net income to                                                                                                          |   |   |   |   |   |   |   |   |
|     net                    cash provided by operating activities:                                                                              |   |   |   |   |   |   |   |   |
|         Depreciation                    and amortization of premises and equipment                                         |   |   | 569,000 |   |   |   | 544,000 |   |
|         Amortization                    of premiums and accretion of discounts, net                                        |   |   | 102,000 |   |   |   | 199,000 |   |
|         Accretion                    of deferred loan fees                                                                 |   |   | (71,000 | ) |   |   | (94,000 | ) |
|         Provision                    for loan losses                                                                       |   |   | 280,000 |   |   |   | 250,000 |   |
|         Valuation                    reserve on other real estate                                                          |   |   | 32,000 |   |   |   | - |   |
|         Originations                    of mortgage loans held for sale                                                    |   |   | (24,308,000 | ) |   |   | (17,318,000 | ) |
|         Proceeds                    from sale of mortgage loans                                                            |   |   | 25,335,000 |   |   |   | 17,073,000 |   |
|         Gain                    on sale of loans                                                                           |   |   | (259,000 | ) |   |   | (165,000 | ) |
|         Deferred                    income tax benefit                                                                     |   |   | (32,000 | ) |   |   | (103,000 | ) |
|         Amortization                    of intangible assets                                                               |   |   | 24,000 |   |   |   | 29,000 |   |
|         Nonqualified                    stock option expense                                                               |   |   | 38,000 |   |   |   | 38,000 |   |
|         Increase                    in bank owned life insurance                                                           |   |   | (240,000 | ) |   |   | (233,000 | ) |
|         Life                    insurance proceeds                                                                         |   |   | (459,000 | ) |   |   | - |   |
|         Increase                    in accrued interest receivable                                                         |   |   | (281,000 | ) |   |   | (161,000 | ) |
|         Decrease                    in other assets                                                                        |   |   | 120,000 |   |   |   | 82,000 |   |
|         Increase                    in accrued interest payable                                                            |   |   | 207,000 |   |   |   | 619,000 |   |
|         Decrease                    in other liabilities                                                                   |   |   | (37,000 | ) |   |   | (99,000 | ) |
|                  Net                    cash provided by operating activities |   |   | 4,789,000 |   |   |   | 4,162,000 |   |
|                                                                                                                                                               |   |   |   |   |   |   |   |   |
| **Cash                    flows from investing activities:**                                                                                                       |   |   |   |   |   |   |   |   |
|     Purchase                    of securities available for sale                                                                               |   |   | (15,628,000 | ) |   |   | (11,260,000 | ) |
|     Proceeds                    from maturities and principal repayments                                                                       |   |   |   |   |   |   |   |   |
|           on                    securities available for sale                                                    |   |   | 8,815,000 |   |   |   | 8,867,000 |   |
|     Proceeds                    from calls on securities available for sale                                                                    |   |   | 300,000 |   |   |   | - |   |
|     Purchase                    of securities held to maturity                                                                                 |   |   | (7,450,000 | ) |   |   | (11,430,000 | ) |
|     Proceeds                    from maturities and principal repayments on                                                                    |   |   |   |   |   |   |   |   |
|           securities                    held to maturity                                                         |   |   | 6,471,000 |   |   |   | 9,579,000 |   |
|     Proceeds                    from calls on securities held to maturity                                                                      |   |   | 152,000 |   |   |   | 950,000 |   |
|     Purchase                    of FHLB-NY stock                                                                                               |   |   | 294,000 |   |   |   | 130,000 |   |
|     Net                    increase in loans                                                                                                   |   |   | (26,171,000 | ) |   |   | (20,192,000 | ) |
|     Additional                    investment in other real estate owned                                                                        |   |   | (324,000 | ) |   |   | - |   |
|     Proceeds                    from life insurance payout                                                                                     |   |   | 1,030,000 |   |   |   | - |   |
|     Additions                    to premises and equipment                                                                                     |   |   | (1,138,000 | ) |   |   | (659,000 | ) |
|                  Net                    cash used in investing activities     |   |   | (33,649,000 | ) |   |   | (24,015,000 | ) |
|                                                                                                                                                               |   |   |   |   |   |   |   |   |
| **Cash                    flows from financing activities:**                                                                                                       |   |   |   |   |   |   |   |   |
|      Net                    increase in noninterest-bearing deposits                                                                      |   |   | 4,292,000 |   |   |   | 8,889,000 |   |
|      Net                    increase in interest-bearing deposits                                                                         |   |   | 20,056,000 |   |   |   | 14,394,000 |   |
|      Net                    increase in securities sold under agreements                                                                  |   |   |   |   |   |   |   |   |
|          to                    repurchase                                                                             |   |   | 7,781,000 |   |   |   | 4,148,000 |   |
|      Net                    decrease in short term borrowings                                                                             |   |   | (6,400,000 | ) |   |   | (3,400,000 | ) |
|      Payments                    on long term borrowings                                                                                  |   |   | (1,230,000 | ) |   |   | (1,190,000 | ) |
|      Cash                    dividends paid on common stock                                                                               |   |   | (1,358,000 | ) |   |   | (733,000 | ) |
|      Payment                    of discount on dividend reinvestment plan                                                                 |   |   | (33,000 | ) |   |   | (10,000 | ) |
|      Purchase                    of treasury stock                                                                                        |   |   | - |   |   |   | (235,000 | ) |
|      Options                    exercised                                                                                                 |   |   | 59,000 |   |   |   | 233,000 |   |
|      Tax                    benefit of stock options                                                                                      |   |   | 2,000 |   |   |   | - |   |
|      Issuance                    of common stock                                                                                          |   |   | 42,000 |   |   |   | 69,000 |   |
|      Net                    cash provided by financing activities                                                                         |   |   | 23,211,000 |   |   |   | 22,165,000 |   |
|                                                                                                                                                               |   |   |   |   |   |   |   |   |
|      Net                    decrease (increase) in cash and cash equivalents                                                              |   |   | (5,649,000 | ) |   |   | 2,312,000 |   |
|      Cash                    and cash equivalents - beginning                                                                             |   |   | 15,697,000 |   |   |   | 14,028,000 |   |
|      Cash                    and cash equivalents - ending                                                                                |   | $ | 10,048,000 |   |   | $ | 16,340,000 |   |
|                                                                                                                                                               |   |   |   |   |   |   |   |   |
| **Supplemental                    disclosures of cash flow information:**                                                                                          |   |   |   |   |   |   |   |   |
|      Cash                    paid during the period for interest                                                                          |   |   | 9,980,000 |   |   |   | 7,198,000 |   |
|      Cash                    paid during the period for income taxes                                                                      |   |   | 1,699,000 |   |   |   | 2,080,000 |   |
|       Noncash                    investing activities - transfer of loan to ORE                                                      |   |   | 61,000 |   |   |   | - |   |
|       Noncash                    financing activities - issuance of common stock                                                     |   |   |   |   |   |   |   |   |
|           under                    dividend reinvestment plan                                                    |   |   | - |   |   |   | 412,000 |   |
|       Noncash                    transfer of credit card loans to loans held for sale                                                |   |   |   |   |   |   | 3,501,000 |   |

|                                                                           |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| *See                    notes to unaudited consolidated financial statements.* |   |   |   |   |   |   |   |   |

----

*Index*

| **Stewardship                  Financial Corporation and                  Subsidiary**      |
|---------------------------------------------------------------------------------------------|
| **Consolidated                  Statement of Changes in Stockholders' Equity**              |
| **(Unaudited)**                                                                             |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                        |   | **For                  the Period Ended September 30, 2007** |   |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  **Accumulated**  |   |   |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  **Other**   |   |   |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **Comprehensive**  |   |   |
|                                                                                        |   | **Common                  Stock** |   |   | **Treasury                  Stock** |   |   | **Retained** |   | **Loss,**  |   |   |
|                                                                                        |   | **Shares** |   |   | **Amount** |   |   | **Shares** |   |   | **Amount** |   |   | **Earnings** |   | **Net**  | **Total** |   |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                  -- December 31, 2006                                               |   |   | 5,017,919 |   |   | $ | 31,148,000 |   |   |   | - |   |   | $ | - |   |   | $ | 6,750,000 |   |   | $ | (592,000 | ) |   | $ | 37,306,000 |   |
| Cash                  dividends paid                                                        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,358,000 | ) |   |   | - |   |   |   | (1,358,000 | ) |
| 5%                  stock dividend (payable                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      November                  15, 2007)                           |   |   | 253,054 |   |   |   | 3,631,000 |   |   |   | (392 | ) |   |   | (5,000 | ) |   |   | (3,626,000 | ) |   |   | - |   |   |   | - |   |
| Payment                  of discount on dividend                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     reinvestment                  plan                                  |   |   | - |   |   |   | (33,000 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (33,000 | ) |
| Common                  stock issued under stock plans                                      |   |   | 1,810 |   |   |   | 22,000 |   |   |   | 1,462 |   |   |   | 20,000 |   |   |   | - |   |   |   | - |   |   |   | 42,000 |   |
| Stock                  option compensation expense                                          |   |   | - |   |   |   | 38,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 38,000 |   |
| Stock                  options exercised                                                    |   |   | 41,359 |   |   |   | 186,000 |   |   |   | (9,302 | ) |   |   | (127,000 | ) |   |   | - |   |   |   | - |   |   |   | 59,000 |   |
| Tax                  benefit on stock options exercised                                     |   |   |   |   |   |   | 2,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,000 |   |
| Comprehensive                  income:                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net                  income for the nine months                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        ended                  September 30, 2007         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,769,000 |   |   |   | - |   |   |   | 3,769,000 |   |
|    Unrealized                  holding gains on securities                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     available                  for sale arising during the period  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     (net                  of taxes of $163,000)                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 255,000 |   |   |   | 255,000 |   |
| Total                  comprehensive income, net of tax                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 4,024,000 |   |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                  -- September 30, 2007                                              |   |   | 5,314,142 |   |   | $ | 34,994,000 |   |   |   | (8,232 | ) |   | $ | (112,000 | ) |   | $ | 5,535,000 |   |   | $ | (337,000 | ) |   | $ | 40,080,000 |   |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                                        |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
|---------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|--------|-------------------------------------|--------|------------|--------------|--------|-----------|------------|--------|--------|--------------|----------|---------|--------|-----------|------------|--------|-----------------------|--------|----------|--------|--------|--------|------------|--------|
|                                                                                        |   | **For                  the Period Ended September 30, 2006**                     |      |
|                                                                                        |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
|                                                                                        |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |  **Accumulated** |   |     |   |   |
|                                                                                        |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |  **Other**  |   |     |   |   |
|                                                                                        |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   | **Comprehensive**     |   |     |   |   |
|                                                                                        |   | **Common                  Stock**                                                                                                                                                    |      |   | **Treasury                  Stock** |   |       | **Retained** |   | **Loss,** |       |   |   |         |
|                                                                                        |   | **Shares**                                                                                                                                                                           |      |   | **Amount**                          |   |       | **Shares**   |   |      | **Amount** |   |   | **Earnings** |     | **Net** |   | **Total** |       |
|                                                                                        |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
| Balance                  -- December 31, 2005                                               |   |                                                                                                                                                                                 | 5,027,283 |   |                                | $      | 28,211,000 |         |   |      | (41,560    | )      |   | $            | (556,000 | )       |   | $         | 6,647,000  |   |                  | $      | (918,000 | )      |   | $      | 33,384,000 |   |
| Cash                  dividends paid                                                        |   |                                                                                                                                                                                 | -         |   |                                |   | -          |         |   |      | -          |   |   |         | -        |    |   |      | (1,145,000 | )      |                  |   | -        |   |   |   | (1,145,000 | )      |
| 5%                  stock dividend (payable                                                 |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
|      November                  15, 2006)                           |   |                                                                                                                                                                                 | 253,240   |   |                                |   | 3,135,000  |         |   |      | (1,119     | )      |   |         | (14,000  | )       |   |      | (3,121,000 | )      |                  |   | -        |   |   |   | -          |   |
| Payment                  of discount on dividend                                            |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
|     reinvestment                  plan                                  |   |                                                                                                                                                                                 | -         |   |                                |   | (10,000    | )            |   |      | -          |   |   |         | -        |    |   |      | -          |   |                  |   | -        |   |   |   | (10,000    | )      |
| Common                  stock issued under dividend                                         |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
|     reinvestment                  plan                                  |   |                                                                                                                                                                                 | -         |   |                                |   | -          |         |   |      | 31,262     |   |   |         | 412,000  |    |   |      | -          |   |                  |   | -        |   |   |   | 412,000    |   |
| Common                  stock issued under stock plans                                      |   |                                                                                                                                                                                 | -         |   |                                |   | -          |         |   |      | 5,107      |   |   |         | 69,000   |    |   |      | -          |   |                  |   | -        |   |   |   | 69,000     |   |
| Repurchase                  common stock                                                    |   |                                                                                                                                                                                 | -         |   |                                |   | -          |         |   |      | (7,739     | )      |   |         | (103,000 | )       |   |      | -          |   |                  |   | -        |   |   |   | (103,000   | )      |
| Stock                  option compensation expense                                          |   |                                                                                                                                                                                 | -         |   |                                |   | 38,000     |         |   |      | -          |   |   |         | -        |    |   |      | -          |   |                  |   | -        |   |   |   | 38,000     |   |
| Exercise                  of stock options                                                  |   |                                                                                                                                                                                 | 37,523    |   |                                |   | 233,000    |         |   |      | (9,450     | )      |   |         | (132,000 | )       |   |      | -          |   |                  |   | -        |   |   |   | 101,000    |   |
| Tax                  benefit on stock options exercised                                     |   |                                                                                                                                                                                 | -         |   |                                |   | 174,000    |         |   |      | -          |   |   |         | -        |    |   |      | -          |   |                  |   | -        |   |   |   | 174,000    |   |
| Comprehensive                  income:                                                      |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
|    Net                  income for the nine months                           |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
|        ended                  September 30, 2006         |   |                                                                                                                                                                                 | -         |   |                                |   | -          |         |   |      | -          |   |   |         | -        |    |   |      | 3,501,000  |   |                  |   | -        |   |   |   | 3,501,000  |   |
|    Unrealized                  holding gains on securities                   |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
|     available                  for sale arising during the period  |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |
|     (net                  of taxes of $113,000)                         |   |                                                                                                                                                                                 | -         |   |                                |   | -          |         |   |      | -          |   |   |         | -        |    |   |      | -          |   |                  |   | 179,000  |   |   |   | 179,000    |   |
| Total                  comprehensive income, net of tax                                     |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   | 3,680,000  |   |
|                                                                                        |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
| Balance                  -- September 30, 2006                                              |   |                                                                                                                                                                                 | 5,318,046 |   |                                | $      | 31,781,000 |         |   |      | (23,499    | )      |   | $            | (324,000 | )       |   | $         | 5,882,000  |   |                  | $      | (739,000 | )      |   | $      | 36,600,000 |   |
|                                                                                        |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
|                                                                                        |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
|                                                                                        |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
|                                                                                        |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
|                                                                                        |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |   |       |   |
| See                  notes to unaudited consolidated financial statements.                  |   |                                                                                                                                                                                 |      |   |                                |   |       |         |   |      |       |   |   |         |     |    |   |      |       |   |                  |   |     |   |   |

----

*Index*

**Stewardship        Financial Corporation and Subsidiary**

**Notes        to Consolidated Financial Statements**

**September 30,        2007**

**(Unaudited)**

**Note        1.  Summary of Significant Accounting Policies**

**Principles        of consolidation**

**Share-based        Payment Cost**

----

*Index*

|                                                |   |                        |    |    |                            |   |
|-----------------------------------------------------|--------|-----------------------------|---------|---------|---------------------------------|--------|
|                                                |   | 2007                        |    |    | 2006                            |   |
|                                                |   |                        |    |    | Weighted                        |   |   |   |   |   | Weighted |   |
|                                                |   |                        |    |    | Average                         |   |   |   |   |   | Average |   |
|                                                |   | Shares                      |    |    | Exercise                  Price |   |   | Shares |   |   | Exercise                  Price |   |
|                                                |   |                        |    |    |                            |   |   |   |   |   |   |   |
| Outstanding                  at beginning of year   |   |                        | 79,193  |    |                            | $      | 5.70 |   |   |   | 79,788 |   |   | $ | 5.74 |   |
| Granted                                             |   |                        | -       |    |                            |   | - |   |   |   | - |   |   |   | - |   |
| Exercised                                           |   |                        | (41,222 | )  |                            |   | 4.05 |   |   |   | - |   |   |   | - |   |
| Forfeited                                           |   |                        | (1,384  | )  |                            |   | 12.89 |   |   |   | (510 | )  |   |   | 12.34 |   |
| Outstanding                  at end of period       |   |                        | 36,587  |    |                            | $      | 8.01 |   |   |   | 79,278 |   |   | $ | 5.70 |   |
| Options                  exercisable                |   |                        | 36,587  |    |                            |   |   |   |   |   | 79,278 |   |   |   |   |   |
| Weighted-average                  remaining         |   |                        |    |    |                            |   |   |   |   |   |   |   |   |   |   |   |
|    contractual                  life |   | 2.78                  years |    |    |                            |   |   |   | 2.21                  years |   |   |   |   |   |
| Aggregate                  intrinsic value          |   | $                           | 199,000 |    |                            |   |   |   |   | $ | 519,000 |   |   |   |   |   |
|                                                |   |                        |    |    |                            |   |   |   |   |   |   |   |   |   |   |   |

----

*Index*

| Dividend                  yield          | 2.25%                    |
|------------------------------------------|--------------------------|
| Expected                  volatility     | 36.72%                   |
| Risk-free                  interest rate | 5.21%                    |
| Expected                  life           | 6                  years |

|                                                           |   | 2007                        |    |    | 2006                            |   |
|----------------------------------------------------------------|--------|-----------------------------|---------|---------|---------------------------------|--------|
|                                                           |   |                        |    |    | Weighted                        |   |   |   |   |   | Weighted |   |
|                                                           |   |                        |    |    | Average                         |   |   |   |   |   | Average |   |
|                                                           |   | Shares                      |    |    | Exercise                  Price |   |   | Shares |   |   | Exercise                  Price |   |
|                                                           |   |                        |    |    |                            |   |   |   |   |   |   |   |
| Outstanding                  at beginning of year              |   |                        | 60,753  |    |                            | $      | 12.34 |   |   |   | 47,846 |   |   | $ | 6.78 |   |
| Granted                                                        |   |                        | -       |    |                            |   | - |   |   |   | 55,125 |   |   |   | 12.25 |   |
| Exercised                                                      |   |                        | (2,205  | )  |                            |   | 12.24 |   |   |   | (39,399 | )  |   |   | 5.90 |   |
| Expired                                                        |   |                        | -       |    |                            |   | - |   |   |   | (2,819 | )  |   |   | 5.90 |   |
| Outstanding                  at end of period                  |   |                        | 58,548  |    |                            | $      | 12.35 |   |   |   | 60,753 |   |   | $ | 12.34 |   |
| Options                  exercisable                           |   |                        | 14,180  |    |                            |   |   |   |   |   | 5,628 |   |   |   |   |   |
| Weighted-average                  remaining                    |   |                        |    |    |                            |   |   |   |   |   |   |   |   |   |   |   |
|   contractual                  life                  |   | 4.48                  years |    |    |                            |   |   |   | 5.51                  years |   |   |   |   |   |
| Aggregate                  intrinsic value                     |   | $                           | 77,000  |    |                            |   |   |   |   | $ | - |   |   |   |   |   |
| Weighted-average                  fair value of                |   |                        |    |    |                            |   |   |   |   |   |   |   |   |   |   |   |
|   options                  granted during the period |   | $                      |  - |    |                            |   |   |   |   | $ | 4.33 |   |   |   |   |   |

**Note        2.   Basis of presentation**

----

*Index*

**Stewardship          Financial Corporation and Subsidiary**

**Notes          to Consolidated Financial Statements Continued**

**(Unaudited)**

**Note          3.   Securities Available for Sale**

|                                                                          |   | September                    30, 2007       |       |
|-------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|------------|
|                                                                          |   |                                                                      |       |   | Gross |   |   | Gross |   |
|                                                                          |   | Fair                                                                      |       |   | Unrealized |   |   | Unrealized |   |
|                                                                          |   | Value                                                                     |       |   | Holding                    Gains |   |   | Holding                    Losses |   |
|                                                                          |   |                                                                      |       |   |   |   |   |   |   |
|     U.S.                    government-sponsored agencies |   | $                                                                    | 40,818,000 |   |   | $  | 212,000 |   |   | $  | 87,000 |   |
|     Obligations                    of state and political |   |                                                                      |       |   |   |   |   |   |   |   |   |   |
|          subdivisions            |   |                                                                      | 2,421,000  |   |   |   | 1,000 |   |   |   | 49,000 |   |
|     Mortgage-backed                    securities         |   |                                                                      | 35,216,000 |   |   |   | 27,000 |   |   |   | 621,000 |   |
|     Other                    securities                   |   |                                                                      | 1,199,000  |   |   |   | - |   |   |   | 35,000 |   |
|                                                                          |   | $                                                                         | 79,654,000 |   |   | $ | 240,000 |   |   | $ | 792,000 |   |
|                                                                          |   |                                                                      |       |   |   |   |   |   |   |   |   |   |

|                                                                          |   | December                    31, 2006         |       |
|-------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|------------|
|                                                                          |   |                                                                                 |       |   |   | Gross |   |   | Gross |   |
|                                                                          |   | Fair                                                                                 |       |   | Unrealized |   |   | Unrealized |   |
|                                                                          |   | Value                                                                                |       |   | Holding                    Gains |   |   | Holding                    Losses |   |
|                                                                          |   |                                                                                 |       |   |   |   |   |   |   |   |   |   |
|     U.S.                    government-sponsored agencies |   | $                                                                                    | 32,117,000 |   |   | $ | 28,000 |   |   | $ | 347,000 |   |
|     Obligations                    of state and political |   |                                                                                 |       |   |   |   |   |   |   |   |   |   |
|          subdivisions            |   |                                                                                 | 1,823,000  |   |   |   | - |   |   |   | 30,000 |   |
|     Mortgage-backed                    securities         |   |                                                                                 | 37,707,000 |   |   |   | 40,000 |   |   |   | 641,000 |   |
|     Other                    securities                   |   |                                                                                 | 1,099,000  |   |   |   | - |   |   |   | 21,000 |   |
|                                                                          |   | $                                                                                    | 72,746,000 |   |   | $ | 68,000 |   |   | $ | 1,039,000 |   |

**Note          4.   Securities Held to Maturity**

|                                                                            |   | September                      30, 2007 |       |
|---------------------------------------------------------------------------------|--------|-----------------------------------------|------------|
|                                                                            |   |                                    |       |   | Gross |   |   | Gross |   |   |   |   |
|                                                                            |   | Carrying                                |       |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                                                            |   | Value                                   |       |   | Holding                      Gains |   |   | Holding                      Losses |   |   | Value |   |
|                                                                            |   |                                    |       |   |   |   |   |   |   |   |   |   |
|     U.S.                      Treasury securities           |   | $                                       | 501,000    |   |   | $ | 3,000 |   |   | $ | - |   |   | $ | 504,000 |   |
|     U.S.                      government-sponsored agencies |   |                                    | 10,826,000 |   |   |   | 34,000 |   |   |   | 14,000 |   |   |   | 10,846,000 |   |
|     Obligations                      of state and political |   |                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          subdivisions              |   |                                    | 22,478,000 |   |   |   | 41,000 |   |   |   | 209,000 |   |   |   | 22,310,000 |   |
|     Mortgage-backed                      securities         |   |                                    | 6,106,000  |   |   |   | 27,000 |   |   |   | 98,000 |   |   |   | 6,035,000 |   |
|                                                                            |   | $                                       | 39,911,000 |   |   | $ | 105,000 |   |   | $ | 321,000 |   |   | $ | 39,695,000 |   |

|                                                                            |   | December                      31, 2006 |       |
|---------------------------------------------------------------------------------|--------|----------------------------------------|------------|
|                                                                            |   |                                   |       |   |   | Gross |   |   | Gross |   |   |   |   |   |
|                                                                            |   | Carrying                               |       |   | Unrecognized |   |   | Unrecognized |   |   | Fair |   |
|                                                                            |   | Value                                  |       |   | Holding                      Gains |   |   | Holding                      Losses |   |   | Value |   |
|                                                                            |   |                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     U.S.                      Treasury securities           |   | $                                      | 502,000    |   |   | $ | - |   |   | $ | 2,000 |   |   | $ | 500,000 |   |
|     U.S.                      government-sponsored agencies |   |                                   | 10,776,000 |   |   |   | 8,000 |   |   |   | 109,000 |   |   |   | 10,675,000 |   |
|     Obligations                      of state and political |   |                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          subdivisions              |   |                                   | 20,516,000 |   |   |   | 53,000 |   |   |   | 154,000 |   |   |   | 20,415,000 |   |
|     Mortgage-backed                      securities         |   |                                   | 7,369,000  |   |   |   | 32,000 |   |   |   | 110,000 |   |   |   | 7,291,000 |   |
|                                                                            |   | $                                      | 39,163,000 |   |   | $ | 93,000 |   |   | $ | 375,000 |   |   | $ | 38,881,000 |   |

----

*Index*

**Stewardship          Financial Corporation and Subsidiary**

**Notes          to Consolidated Financial Statements Continued**

**(Unaudited)**

**Note          5.   Loans**

|                                                                                                   |   | September                  30, |        |   | December                  31, |   |
|--------------------------------------------------------------------------------------------------------|--------|--------------------------------|-------------|--------|-------------------------------|--------|
|                                                                                                   |   | 2007                           |        |   | 2006                          |   |
|                                                                                                   |   |                           |        |   |                          |   |
|                                                                                                   |   |                           |        |   |                          |   |
| Mortgage                                                                                               |   |                           |        |   |                          |   |
|      Residential                                                              |   | $                              | 45,675,000  |   |                          | $      | 47,020,000 |   |
|      Commercial                                                               |   |                           | 190,517,000 |   |                          |   | 177,411,000 |   |
| Commercial                                                                                             |   |                           | 84,160,000  |   |                          |   | 72,606,000 |   |
| Equity                                                                                                 |   |                           | 19,287,000  |   |                          |   | 20,010,000 |   |
| Installment                                                                                            |   |                           | 54,002,000  |   |                          |   | 52,389,000 |   |
| Other                                                                                                  |   |                           | 2,367,000   |   |                          |   | 560,000 |   |
|         Total                  loans                           |   |                           | 396,008,000 |   |                          |   | 369,996,000 |   |
|                                                                                                   |   |                           |        |   |                          |   |   |   |
| Less:  Deferred                  loan fees                                                   |   |                           | 414,000     |   |                          |   | 452,000 |   |
|           Allowance                  for loan losses |   |                           | 4,249,000   |   |                          |   | 4,101,000 |   |
|                                                                                                   |   |                           | 4,663,000   |   |                          |   | 4,553,000 |   |
|                                                                                                   |   |                           |        |   |                          |   |   |   |
|         Loans,                  net                            |   | $                              | 391,345,000 |   |                          | $      | 365,443,000 |   |

|                                                                    |   |                                             |      |   |   |   |      |   |
|-------------------------------------------------------------------------|--------|--------------------------------------------------|-----------|--------|--------|--------|-----------|--------|
| **Note                  6.   Allowance for loan losses** |   |                                             |      |   |   |   |      |   |
|                                                                    |   | Nine                  Months Ended September 30, |      |
|                                                                    |   | 2007                                             |      |   | 2006   |   |
|                                                                    |   |                                             |      |   |   |   |      |   |
| Balance,                  beginning of period                           |   | $                                                | 4,101,000 |   |   | $      | 3,847,000 |   |
| Provision                  charged to operations                        |   |                                             | 280,000   |   |   |   | 250,000   |   |
| Recoveries                  of loans charged off                        |   |                                             | 8,000     |   |   |   | 26,000    |   |
| Loans                  charged off                                      |   |                                             | (140,000  | )      |   |   | (37,000   | )      |
|                                                                    |   |                                             |      |   |   |   |      |   |
| Balance,                  end of period                                 |   | $                                                | 4,249,000 |   |   | $      | 4,086,000 |   |

----

*Index*

**Stewardship        Financial Corporation and Subsidiary**

**Notes        to Consolidated Financial Statements Continued**

**(Unaudited)**

**Note        7.  Loan Impairment**

|                                                                               |   |                           |    |   |                          |   |
|------------------------------------------------------------------------------------|--------|--------------------------------|---------|--------|-------------------------------|--------|
|                                                                               |   |                           |    |   |                          |   |
|                                                                               |   | September                  30, |    |   | December                  31, |   |
|                                                                               |   | 2007                           |    |   | 2006                          |   |
|                                                                               |   |                           |    |   |                          |   |
| Impaired                  loans                                                    |   |                           |    |   |                          |   |
|     With                  related allowance for loan losses    |   | $                              | 85,000  |   |                          | $      | 223,000 |   |
|     Without                  related allowance for loan losses |   |                           | 153,000 |   |                          |   | 221,000 |   |
| Total                  impaired loans                                              |   | $                              | 238,000 |   |                          | $      | 444,000 |   |
|                                                                               |   |                           |    |   |                          |   |   |   |
| Related                  allowance for loan losses                                 |   | $                              | 25,000  |   |                          | $      | 110,000 |   |

----

*Index*

**Stewardship        Financial Corporation and Subsidiary**

**Notes        to Consolidated Financial Statements Continued**

**(Unaudited)**

**Note        8.  Recent Accounting Pronouncements**

**FIN        48, “Accounting for Uncertainty in Income Taxes”**

**SFAS        No. 157, “Fair Value Measurements”**

**SFAS        No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities –Including an amendment of FASB Statement No. 115”**

**FASB          Emerging Issues Task Force Issue No. 06-4, “Accounting for Deferred Compensation          and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance          Arrangements”**

**FASB          Emerging Issues Task Force Issue No. 06-5, “Accounting for Purchases of life          Insurance – Determining the Amount That Could Be Realized in Accordance with          FASB Technical Bulletin No. 85-4 (Accounting for Purchases of Life          Insurance)”**

* *

----

*Index*

**Note        9.   Earnings Per Share**

|                                                      |   | Three                    Months Ended                                       |   |   | Six                    Months Ended |   |
|-----------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|--------|-------------------------------------|--------|
|                                                      |   | September                    30,                                            |   |   | September                    30,    |   |
|                                                      |   | 2007                                                                        |   |   | 2006                                |   |   | 2007 |   |   | 2006 |   |
|                                                      |   | (Dollars                    and shares in thousands, except per share data) |   |
| Net                    income                             |   | $                                                                           | 1,229  |   |                                | $      | 1,225 |   |   | $ | 3,769 |   |   | $ | 3,501 |   |
|                                                      |   |                                                                        |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                    average shares                |   |                                                                        | 5,305  |   |                                |   | 5,294 |   |   |   | 5,289 |   |   |   | 5,271 |   |
| Effect                    of dilutive stock options       |   |                                                                        | 17     |   |                                |   | 43 |   |   |   | 28 |   |   |   | 51 |   |
| Total                    weighted average dilutive shares |   |                                                                        | 5,322  |   |                                |   | 5,337 |   |   |   | 5,317 |   |   |   | 5,322 |   |
|                                                      |   |                                                                        |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic                    earnings per share               |   | $                                                                           | 0.23   |   |                                | $      | 0.23 |   |   | $ | 0.71 |   |   | $ | 0.66 |   |
| Diluted                    earnings per share             |   | $                                                                           | 0.23   |   |                                | $      | 0.23 |   |   | $ | 0.71 |   |   | $ | 0.66 |   |

**Note        10.  Comprehensive Income**

----

*Index*

**Item      2.**

**Stewardship      Financial Corporation**

**Management’s      Discussion and Analysis of**

**Financial      Condition and Results of Operations**

**Critical      Accounting Policies and Estimates**

----

*Index*

**Financial      Condition**

----

*Index*

**Results      of Operations**

**Nine      Months Ended September 30, 2007 and 2006**

----

*Index*

| Analysis                  of Net Interest Income (Unaudited)              |
|---------------------------------------------------------------------------|
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| For                  the Nine Months Ended September                  30, |

|                                                                   |   | 2007                                        |    |   |    2006 |   |
|------------------------------------------------------------------------|--------|---------------------------------------------|---------|--------|------------------------|--------|
|                                                                   |   |                                        |    |   |                   |   |   | 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)                                         |   | $                                           | 379,189 |   |                   | $      | 20,289 |   |   |   | 7.15 | % |   | $ | 356,857 |   |   | $ | 18,963 |   |   |   | 7.10 | % |
| Taxable                      investment securities (1)                 |   |                                        | 93,092  |   |                   |   | 3,646 |   |   |   | 5.24 |   |   |   | 85,211 |   |   |   | 2,702 |   |   |   | 4.24 |   |
| Tax-exempt                      investment securities (1) (2)          |   |                                        | 22,880  |   |                   |   | 872 |   |   |   | 7.62 |   |   |   | 17,877 |   |   |   | 606 |   |   |   | 6.78 |   |
| Other                      interest-earning assets                     |   |                                        | 744     |   |                   |   | 39 |   |   |   | 7.01 |   |   |   | 498 |   |   |   | 29 |   |   |   | 7.79 |   |
| Total                      interest-earning assets                     |   |                                        | 495,905 |   |                   |   | 24,846 |   |   |   | 6.70 |   |   |   | 460,443 |   |   |   | 22,300 |   |   |   | 6.48 |   |
|                                                                   |   |                                        |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-earning                      assets:                      |   |                                        |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance                      for loan losses                         |   |                                        | (4,147  | )      |                   |   |   |   |   |   |   |   |   |   | (3,993 | ) |   |   |   |   |   |   |   |   |
| Other                      assets                                      |   |                                        | 33,395  |   |                   |   |   |   |   |   |   |   |   |   | 32,584 |   |   |   |   |   |   |   |   |   |
| Total                      assets                                      |   | $                                           | 525,153 |   |                   |   |   |   |   |   |   |   |   | $ | 489,034 |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                                        |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                                        |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                      and Stockholders' Equity**          |   |                                        |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                                        |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                      liabilities:                     |   |                                        |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                      demand deposits                  |   | $                                           | 127,765 |   |                   | $      | 2,353 |   |   |   | 2.46 | % |   | $ | 115,775 |   |   | $ | 1,433 |   |   |   | 1.65 | % |
| Savings                      deposits                                  |   |                                        | 37,363  |   |                   |   | 211 |   |   |   | 0.76 |   |   |   | 43,026 |   |   |   | 188 |   |   |   | 0.58 |   |
| Time                      deposits                                     |   |                                        | 183,801 |   |                   |   | 6,246 |   |   |   | 4.54 |   |   |   | 154,696 |   |   |   | 4,567 |   |   |   | 3.95 |   |
| Repurchase                      agreements                             |   |                                        | 10,534  |   |                   |   | 351 |   |   |   | 4.45 |   |   |   | 6,755 |   |   |   | 220 |   |   |   | 4.35 |   |
| FHLB                      Borrowing                                    |   |                                        | 20,281  |   |                   |   | 662 |   |   |   | 4.36 |   |   |   | 31,333 |   |   |   | 1,034 |   |   |   | 4.41 |   |
| Subordinated                      debenture                            |   |                                        | 7,217   |   |                   |   | 365 |   |   |   | 6.76 |   |   |   | 7,217 |   |   |   | 365 |   |   |   | 6.76 |   |
| Total                      interest-bearing liabilities                |   |                                        | 386,961 |   |                   |   | 10,188 |   |   |   | 3.52 |   |   |   | 358,802 |   |   |   | 7,807 |   |   |   | 2.91 |   |
| Non-interest-bearing                      liabilities:                 |   |                                        |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand                      deposits                                   |   |                                        | 95,602  |   |                   |   |   |   |   |   |   |   |   |   | 91,335 |   |   |   |   |   |   |   |   |   |
| Other                      liabilities                                 |   |                                        | 4,014   |   |                   |   |   |   |   |   |   |   |   |   | 3,991 |   |   |   |   |   |   |   |   |   |
| Stockholders'                      equity                              |   |                                        | 38,576  |   |                   |   |   |   |   |   |   |   |   |   | 34,906 |   |   |   |   |   |   |   |   |   |
| Total                      liabilities and stockholders' equity        |   | $                                           | 525,153 |   |                   |   |   |   |   |   |   |   |   | $ | 489,034 |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                                        |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                      interest income (taxable equivalent basis)    |   |                                        |    |   |                   | $      | 14,658 |   |   |   |   |   |   |   |   |   |   | $ | 14,493 |   |   |   |   |   |
| Tax                      equivalent adjustment                         |   |                                        |    |   |                   |   | (271 | ) |   |   |   |   |   |   |   |   |   |   | (189 | ) |   |   |   |   |
| Net                      interest income                               |   |                                        |    |   |                   |   | 14,387 |   |   |   |   |   |   |   |   |   |   |   | 14,304 |   |   |   |   |   |
|                                                                   |   |                                        |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                      interest spread (taxable equivalent basis)    |   |                                        |    |   |                   |   |   |   |   |   | 3.18 | % |   |   |   |   |   |   |   |   |   |   | 3.57 | % |
|                                                                   |   |                                        |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                      yield on interest-earning                     |   |                                        |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   assets                      (taxable equivalent basis) (3) |   |                                        |    |   |                   |   |   |   |   |   | 3.95 | % |   |   |   |   |   |   |   |   |   |   | 4.21 | % |
|                                                                   |   |                                        |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|      (1)                            For purpose of these calculations, nonaccruing loans are included                      in                      the average balance.  Fees are included in loan                      interest.  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*

----

*Index*

**Results      of Operations**

**Three      Months Ended September 30, 2007 and 2006**

----

*Index*

| Analysis                  of Net Interest Income (Unaudited)               |
|----------------------------------------------------------------------------|
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| For                  the Three Months Ended September                  30, |

|                                                                   |   | 2007                                                                                                                                  |    |   | 2006                   |   |
|------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|---------|--------|------------------------|--------|
|                                                                   |   | AverageBalance                                                                                                                        |    |   | InterestIncome/Expense |   |   | AverageRatesEarned/Paid |   |   | AverageBalance |   |   | InterestIncome/Expense |   |   | AverageRatesEarned/Paid |   |
|                                                                   |   | (Dollars                      in thousands)                |    |
| **Assets**                                                             |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning                      assets:                          |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                      (1)                                         |   | $                                                                                                                                     | 388,936 |   |                   | $      | 7,003 |   |   |   | 7.14 | % |   | $ | 366,340 |   |   | $ | 6,685 |   |   |   | 7.24 | % |
| Taxable                      investment securities (1)                 |   |                                                                                                                                  | 96,633  |   |                   |   | 1,288 |   |   |   | 5.29 |   |   |   | 83,904 |   |   |   | 930 |   |   |   | 4.40 |   |
| Tax-exempt                      investment securities (1) (2)          |   |                                                                                                                                  | 24,085  |   |                   |   | 313 |   |   |   | 5.20 |   |   |   | 20,361 |   |   |   | 242 |   |   |   | 4.75 |   |
| Other                      interest-earning assets                     |   |                                                                                                                                  | 1,242   |   |                   |   | 19 |   |   |   | 6.07 |   |   |   | 627 |   |   |   | 11 |   |   |   | 6.96 |   |
| Total                      interest-earning assets                     |   |                                                                                                                                  | 510,896 |   |                   |   | 8,623 |   |   |   | 6.70 |   |   |   | 471,232 |   |   |   | 7,868 |   |   |   | 6.62 |   |
|                                                                   |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-earning                      assets:                      |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance                      for loan losses                         |   |                                                                                                                                  | (4,217  | )      |                   |   |   |   |   |   |   |   |   |   | (4,061 | ) |   |   |   |   |   |   |   |   |
| Other                      assets                                      |   |                                                                                                                                  | 33,564  |   |                   |   |   |   |   |   |   |   |   |   | 32,791 |   |   |   |   |   |   |   |   |   |
| Total                      assets                                      |   | $                                                                                                                                     | 540,243 |   |                   |   |   |   |   |   |   |   |   | $ | 499,962 |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                      and Stockholders' Equity**          |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                      liabilities:                     |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                      demand deposits                  |   | $                                                                                                                                     | 140,991 |   |                   | $      | 973 |   |   |   | 2.74 | % |   | $ | 113,829 |   |   | $ | 546 |   |   |   | 1.90 | % |
| Savings                      deposits                                  |   |                                                                                                                                  | 36,816  |   |                   |   | 71 |   |   |   | 0.77 |   |   |   | 41,388 |   |   |   | 61 |   |   |   | 0.58 |   |
| Time                      deposits                                     |   |                                                                                                                                  | 186,397 |   |                   |   | 2,144 |   |   |   | 4.56 |   |   |   | 168,333 |   |   |   | 1,789 |   |   |   | 4.22 |   |
| Repurchase                      agreements                             |   |                                                                                                                                  | 11,855  |   |                   |   | 127 |   |   |   | 4.25 |   |   |   | 8,106 |   |   |   | 95 |   |   |   | 4.65 |   |
| FHLB                      Borrowing                                    |   |                                                                                                                                  | 16,802  |   |                   |   | 176 |   |   |   | 4.16 |   |   |   | 27,489 |   |   |   | 315 |   |   |   | 4.55 |   |
| Subordinated                      debenture                            |   |                                                                                                                                  | 7,217   |   |                   |   | 122 |   |   |   | 6.71 |   |   |   | 7,217 |   |   |   | 122 |   |   |   | 6.71 |   |
| Total                      interest-bearing liabilities                |   |                                                                                                                                  | 400,078 |   |                   |   | 3,613 |   |   |   | 3.58 |   |   |   | 366,362 |   |   |   | 2,928 |   |   |   | 3.17 |   |
| Non-interest-bearing                      liabilities:                 |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand                      deposits                                   |   |                                                                                                                                  | 96,431  |   |                   |   |   |   |   |   |   |   |   |   | 93,296 |   |   |   |   |   |   |   |   |   |
| Other                      liabilities                                 |   |                                                                                                                                  | 4,444   |   |                   |   |   |   |   |   |   |   |   |   | 4,314 |   |   |   |   |   |   |   |   |   |
| Stockholders'                      equity                              |   |                                                                                                                                  | 39,290  |   |                   |   |   |   |   |   |   |   |   |   | 35,990 |   |   |   |   |   |   |   |   |   |
| Total                      liabilities and stockholders' equity        |   | $                                                                                                                                     | 540,243 |   |                   |   |   |   |   |   |   |   |   | $ | 499,962 |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                      interest income (taxable equivalent basis)    |   |                                                                                                                                  |    |   |                   | $      | 5,010 |   |   |   |   |   |   |   |   |   |   | $ | 4,940 |   |   |   |   |   |
| Tax                      equivalent adjustment                         |   |                                                                                                                                  |    |   |                   |   | (97 | ) |   |   |   |   |   |   |   |   |   |   | (75 | ) |   |   |   |   |
| Net                      interest income                               |   |                                                                                                                                  |    |   |                   |   | 4,913 |   |   |   |   |   |   |   |   |   |   |   | 4,865 |   |   |   |   |   |
|                                                                   |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                      interest spread (taxable equivalent basis)    |   |                                                                                                                                  |    |   |                   |   |   |   |   |   | 3.11 | % |   |   |   |   |   |   |   |   |   |   | 3.45 | % |
|                                                                   |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                      yield on interest-earning                     |   |                                                                                                                                  |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   assets                      (taxable equivalent basis) (3) |   |                                                                                                                                  |    |   |                   |   |   |   |   |   | 3.89 | %  |   |   |   |   |   |   |   |   |   |   | 4.16 | % |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|      (1)                          For purpose of these calculations, nonaccruing loans are included                    in the                    average balance.  Fees are included in loan                    interest.  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*

----

*Index*

**Asset      Quality**

|                                                                       |   | 09/30/07                              |   |   | 06/30/07 |   |   | 03/31/07 |   |   | 12/31/06 |   |
|----------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
|                                                                       |   | (Dollars                in Thousands) |   |
| Nonaccrual                loans: (1)                                       |   | $                                     | 238    |   |     | $      | 300    |     |   | $      | 445      |   |   | $ | 444 |   |
| Loans                past due 90 days or more: (2)                         |   |                                  | 28     |   |     |   | 10     |     |   |   | 5        |   |   |   | 1,090 |   |
|      Total                nonperforming loans     |   | $                                     | 266    |   |     | $      | 310    |     |   | $      | 450      |   |   | $ | 1,534 |   |
|                                                                       |   |                                  |   |   |     |   |   |     |   |   |     |   |   |   |   |   |
| Other                real estate owned (3)                                 |   | $                                     | 353    |   |     | $      | 385    |     |   | $      | -        |   |   | $ | - |   |
|                                                                       |   |                                  |   |   |     |   |   |     |   |   |     |   |   |   |   |   |
| Total                nonperforming assets                                  |   | $                                     | 619    |   |     | $      | 695    |     |   | $      | 450      |   |   | $ | 1,534 |   |
|                                                                       |   |                                  |   |   |     |   |   |     |   |   |     |   |   |   |   |   |
| Allowance                for loan losses                                   |   | $                                     | 4,249  |   |     | $      | 4,181  |     |   | $      | 4,093    |   |   | $ | 4,101 |   |
|                                                                       |   |                                  |   |   |     |   |   |     |   |   |     |   |   |   |   |   |
| Nonaccrual                loans to total loans                             |   |                                  | 0.06   | %      |     |   | 0.08   | %        |   |   | 0.12     | %      |   |   | 0.12 | % |
| Nonperforming                loans to total loans                          |   |                                  | 0.07   | %      |     |   | 0.08   | %        |   |   | 0.12     | %      |   |   | 0.41 | % |
| Nonperforming                loans to total assets     |   |                                  | 0.05   | %      |     |   | 0.06   | %        |   |   | 0.09     | %      |   |   | 0.30 | % |
| Nonperforming                assets to total assets                        |   |                                  | 0.11   | %      |     |   | 0.13   | %        |   |   | 0.09     | %      |   |   | 0.30 | % |
| Allowance                for loan losses to total loans                    |   |                                  | 1.07   | %      |     |   | 1.09   | %        |   |   | 1.10     | %      |   |   | 1.11 | % |

----

*Index*

**Market      Risk**

**Capital      Adequacy**

----

*Index*

|                                                |   | Required |   |   | Actual |   |   | Excess |   |
|-----------------------------------------------------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
| Risk-based                Capital                   |   |     |   |   |   |   |   |   |   |
|      Tier                1 |   |     | 4.00   | %      |   |   | 11.14  | %      |   |   | 7.14 | % |
|      Total                 |   |     | 8.00   | %      |   |   | 12.14  | %      |   |   | 4.14 | % |
|  Leverage                Ratio                 |   |     | 4.00   | %      |   |   | 8.76   | %      |   |   | 4.76 | % |

**Liquidity      and Capital Resources**

----

*Index*

**ITEM      3.  Quantitative and Qualitative Disclosures about      Market Risk**

**ITEM      4.  Controls and Procedures**

----

*Index*

**Stewardship      Financial Corporation**

**Part      II -- Other Information**

o

h

|   | (a) | Exhibits |
|--------|-----|----------|

----

*Index*

I

| Date:  | November                14, 2007 |   | By:    | /s/                Paul Van Ostenbridge            |
|--------|----------------------------------|--------|--------|----------------------------------------------------|
|   |                             |   |   | Paul                Van Ostenbridge                |
|   |                             |   |   | President                and Chief Executive       |
|   |                             |   |   | Officer                                            |
|   |                             |   |   | (authorized                officer on behalf       |
|   |                             |   |   | of                registrant)                      |
|   |                             |   |   |                                               |
|   |                             |   |   |                                               |
|   |                             |   |   |                                               |
| Date:  | November                14, 2007 |   | By:    | /s/                Julie E. Holland                |
|   |                             |   |   | Julie                E. Holland                    |
|   |                             |   |   | Senior                Vice President and Treasurer |
|   |                             |   |   | (principal                accounting officer)      |
|   |                             |   |   |                                               |

----

*Index*

**EXHIBIT      INDEX**

| EXHIBITNUMBER |  DESCRIPTION                                                                                                                                                                                                                                         |   |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|          |                                                                                                                                                                                                                                                      |   |
| 31.1          | Certification                of Paul Van Ostenbridge required by Rule 13a-14(a) or Rule                15d-14(a)                                                                                                                                     |   |
| 31.2          | Certification                of Julie Holland required by Rule 13a-14(a) or Rule 15d-14(a)                                                                                                                                                           |   |
| 32.1          | Certification                of Paul Van Ostenbridge and Julie Holland required by Rule 13a-14(b)                or                Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002,                18                U.S.C. Section 1350 |   |