Edgar Filing: STEWARDSHIP FINANCIAL CORP

SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

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STEWARDSHIP FINANCIAL CORPORATION
(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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Stewardship Financial Corporation
630 Godwin Avenue
Midland Park, New Jersey 07432-1405

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, MAY 11, 2004

To Our Shareholders:

The Annual Meeting of Shareholders of Stewardship Financial Corporation
(the "Corporation") will be held at the branch of Atlantic Stewardship Bank
located at 400 Hamburg Turnpike, Wayne, New Jersey, on May 11, 2004, at 7:00
P.M. for the following purposes:

1. To elect the three (3) directors named in the attached Proxy
Statement for three year terms.

2. To approve an amendment of the Corporation's Certificate of
Incorporation to increase authorized shares of common stock.

3. To transact such other business as may properly come before the
meeting.

Shareholders of record at the close of business on March 31, 2004 are
entitled to notice of, and to vote at, the Annual Meeting. Whether or not you
plan to attend the Annual Meeting, it is requested that the enclosed proxy be
executed and returned to our transfer agent, Registrar and Transfer Company, 10
Commerce Drive, Cranford, NJ 07016, in the envelope provided.

By Order of the Board of Directors

Robert J. Turner
Corporate Secretary

April 5, 2004

Stewardship Financial Corporation
630 Godwin Avenue
Midland Park, New Jersey 07432-1405

------------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 11, 2004
------------------------------

This Proxy Statement is being furnished to shareholders of Stewardship
Financial Corporation (the "Corporation") in connection with the solicitation by
the Board of Directors of proxies to be used at the Annual Meeting of
Shareholders and at any adjournment of the meeting. You are cordially invited to
attend the Annual Meeting that will be held at the branch office of Atlantic
Stewardship Bank located at 400 Hamburg Turnpike, Wayne, New Jersey, on Tuesday,
May 11, 2004 at 7:00 P.M. The 2004 Annual Report to shareholders, including
consolidated financial statements for the fiscal year ended December 31, 2003,
and a proxy card accompany this Proxy Statement, which is first being mailed to
shareholders on or about April 5, 2004.

Voting of Securities

The securities which may be voted at the Annual Meeting consist of shares
of common stock, no par value, of the Corporation ("Common Stock") with each
share entitling its owner to one vote on each matter properly brought before the
Annual Meeting.

The close of business on March 31, 2004 has been fixed by the Board of
Directors as the record date for the determination of shareholders of record
entitled to notice of, and to vote at, the Annual Meeting or any adjournments
thereof. The total number of shares of Common Stock outstanding on the record
date was 3,154,350 shares.

Regardless of the number of shares of Common Stock you own, it is
important that you vote by completing the enclosed proxy card and returning it
signed and dated in the enclosed postage paid envelope. Proxies solicited by the
Board of Directors of the Corporation will be voted in accordance with the
direction given therein. Where no instructions are indicated, signed proxy cards
will be voted "FOR" the election of each of the nominees for director named in
the Proxy Statement and "FOR" the amendment of the Corporation's Certificate of
Incorporation to increase authorized shares of Common Stock. Should any other
matters be properly presented at the Annual Meeting for consideration, such as
consideration of a motion to adjourn the meeting to another time, the persons
named as proxies will have discretion to vote on those matters according to
their best judgment to the same extent as the person delivering the proxy would
be entitled to vote. Other than the matters set forth in the attached Notice of
Annual Meeting of Shareholders, the Board of Directors knows of no additional
matters that may be presented for consideration at the Annual Meeting.

A proxy may be revoked at any time prior to its exercise by sending a
written notice of revocation to Registrar and Transfer Company, 10 Commerce
Drive, Cranford, NJ 07016. In addition, a proxy filed prior to the Annual
Meeting may be revoked by delivering to the Corporation a duly executed proxy
bearing a later date, or by attending the Annual Meeting and voting in person.
If you are a shareholder whose shares are not registered in your own name, you
will need appropriate documentation from your record holder to vote personally
at the Annual Meeting.

Quorum

The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. In the event that there are not
sufficient votes for a quorum, or to approve or ratify any matter being
presented at the time of the Annual Meeting, the Annual Meeting may be adjourned
in order to permit the further solicitation of proxies.

Required Vote

There is no cumulative voting in the election of directors. Directors are
elected by a plurality of votes cast, without regard to either broker non-votes,
or proxies as to which authority to vote for one or more of the nominees is
withheld. Thus, a nominee for director may be elected even if the nominee
receives votes from holders of less than a majority of shares represented at the
meeting. To approve the amendment of the Corporation's Certificate of
Incorporation, an affirmative vote of majority of the votes cast is required.

Cost of Proxy Solicitation

The cost of solicitation of proxies on behalf of the Board of Directors
will be borne by the Corporation. Directors, officers and other employees of the
Corporation may solicit proxies on behalf of the Corporation in person or by
telephone, e-mail, facsimile or other electronic means. These directors,
officers and employees will not receive additional compensation for such
services. The Corporation will reimburse the reasonable expenses of brokerage
firms and other custodians and nominees for sending proxy materials to, and
obtaining proxies from, beneficial owners.

PROPOSAL 1 -- ELECTION OF DIRECTORS

The Corporation's Certificate of Incorporation and its bylaws authorize a
minimum of one and a maximum of twenty-five directors, but the exact number is
fixed by resolution of the Board of Directors. The Board has fixed the current
number of directors at eleven; however, the Board has decided to reduce the
number of seats on its Board to ten effective as of the date of the annual
meeting because Mr. Almroth will be retiring from the Board and will not be
standing for re-election. The Board has been divided into three classes. One
class is elected each year to serve a term of three years. Directors elected at
this Annual Meeting will be elected to serve for a term of three years through
April 2007, or until their successors are duly elected and qualified.

Each nominee has indicated to the Corporation that he will serve if
elected. The Corporation has no reason to believe that any of the nominees will
be unable to stand for election. Unless authority to vote for any of the
nominees is withheld, it is intended that the shares represented by the enclosed
proxy card, if executed and returned, will be voted FOR the election of the
nominees proposed by the Board of Directors. If, for any reason, any of the
nominees becomes unavailable for election, the proxy solicited by the Board of
Directors will be voted for a substitute nominee selected by the Board of
Directors.

The Board of Directors recommends that you vote FOR the election of the
nominees named in this Proxy Statement.

Directors and Nominees for Director

The following sets forth the names of our nominees for director and
directors continuing to serve on our Board following the Annual Meeting; their
ages; a brief description of their recent business experience, including present
occupations; the year in which each became a director of the Corporation and our
wholly-owned subsidiary, Atlantic Stewardship Bank (the "Bank"); and the names
of any public companies for which they serve on the board of directors.

Information With Respect to Nominees for Terms Expiring in 2007

Harold Dyer, age 76, has been a director of the Corporation since 1997.
Mr. Dyer has been a director of the Bank since 1985. From 1957 to 1981, Mr. Dyer
was president of White Laundry, Inc., a laundry service company. Mr. Dyer is
currently retired.

John J. Murphy, age 59, has been a director of the Corporation and the
Bank since 2003. Since 1983, Mr. Murphy has been the senior principal of Murphy
Capital Management, Inc., an investment firm. Mr. Murphy is a member of the
board of directors of Citifund Ltd. Family of Funds.

Abe Van Wingerden, age 67, has been a director of the Corporation and the
Bank since 2001. Since 1985, Mr. Van Wingerden has been the president of Abe Van
Wingerden Company, Inc. T/A Van Wingerden Farms, a retailer of garden equipment
and supplies.

Information With Respect to the Directors with Terms Expiring in 2006

Robert J. Turner, age 64, has been a director of the Corporation since
1997. Mr. Turner has been a director of the Bank since 1985. From 1966 to 2002,
Mr. Turner was the president of The Turner Group, an insurance brokerage
company. Mr. Turner is currently retired.

William J. Vander Eems, age 54, has been a director of the Corporation
since 1997. Mr. Vander Eems has been a director of the Bank since 1991. Since
1973, Mr. Vander Eems has been the president of William Van Der Eems, Inc., a
general contracting company.

Paul Van Ostenbridge, age 51, has been a director of the Corporation since
1997 and has served as President and Chief Executive Officer of the Corporation
since 1997. Mr. Van Ostenbridge has been a director of the Bank since 1985 and
has served as its president and chief executive officer since 1985.

Information With Respect to the Directors With Terms Expiring in 2005

William C. Hanse, age 69, has been a director of the Corporation since
1997. Mr. Hanse has been a director of the Bank since 1985. Since 1990, Mr.
Hanse has been a partner of the law firm Hanse & Hanse.

Margo Lane, age 53, has been a director of the Corporation since 1997. Ms.
Lane has been a director of the Bank since 1994. Since 2004, Ms. Lane has been
the sales and marketing coordinator of PBI-Dansensor America Inc., a company
that sells and services equipment for industrial instrumentation and process
control. From 1976 to 2002, Ms. Lane served as the corporate communications
manager of Garden State Paper Company, LLC, a newsprint manufacturing company.

Arie Leegwater, age 70, has been a director of the Corporation since 1997
and has been Chairman of the Board since 1997. Mr. Leegwater has been a director
of the Bank since 1985 and has been Chairman of the Board of the Bank since
1994. Since 1988, Mr. Leegwater has been the owner of Arie Leegwater Associates
LLC, a general contracting company. Since 2002, Arie Leegwater has been a
partner in ARIEANJE LLC, a company engaged in owning and renting real estate.

John L. Steen, age 66, has been a director of the Corporation since 1997
and has been Vice Chairman of the Board since 1997. Mr. Steen has been a
director of the Bank since 1985 and has been Vice Chairman of the Bank since
1994. Since 1972, Mr. Steen has been the president of Steen Sales, Inc., a
textile company. Since 1972, Mr. Steen has been president of Dutch Valley
Throwing Co., a textile company.

Committees of the Board of Directors

During 2003, the Board of Directors had a standing Audit Committee,
Nominating Committee, Personnel Committee and Stock Compensation Committee. In
2004, the Personnel and Stock Compensation Committees were merged into a newly
formed Compensation Committee. The charters of the Audit Committee, Nominating
Committee and Compensation Committee, as approved by the Board of Directors in
February, 2004, are attached as Exhibits A, B and C to this Proxy Statement.
Copies of our committee charters can be found on our website at www.asbnow.com.

Audit Committee

The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its oversight responsibilities. The Board has adopted a
written charter setting out the functions of the Audit Committee. The audit
functions of the Audit Committee are to: (i) monitor the integrity of the
Corporation's financial reporting process and systems of internal controls; (ii)

monitor the independence and performance of the Corporation's independent
external audit and internal audit functions; (iii) provide avenues of
communication among the independent auditor, management, internal auditors and
the Board of Directors; and (iv) encourage the adherence to, and continuous
improvement of, the Corporation's policies, procedures and practices at all
levels. The Audit Committee also reviews and evaluates the recommendations of
the independent certified public accountant, receives all reports of examination
of the Corporation and the Bank by regulatory agencies, analyzes such regulatory
reports, and informs the Board of the results of their analysis of the
regulatory reports. In addition, the Audit Committee receives reports directly
from the Corporation's internal auditors and recommends any action to be taken
in connection therewith.

In 2003, the Audit Committee consisted of directors Dyer (Chairman),
Almroth, Murphy, Steen and Turner. William C. Hanse was also a member of the
Audit Committee until his resignation in November of 2003. Mr. Hanse received
certain payments in the aggregate amount of approximately $24,000 during the
fiscal year ended December 31, 2003, from the Bank for legal services he
provided. Mr. Hanse resigned from the Audit Committee because he believed that
under future rules and regulations of the SEC or of an exchange where the Common
Stock of the Corporation would be traded, he would not be considered independent
as a result of receipt of these payments, and therefore would be prohibited from
being a member of the Audit Committee.

Nominating Committee

The Nominating Committee nominates candidates to serve on the
Corporation's Board of Directors. In 2003, the Nominating Committee consisted of
directors Steen (Chairman), Almroth, Leegwater and Vander Eems.

The Nominating Committee has adopted a procedure to consider
recommendations for directorships submitted by shareholders holding at least 20%
of our outstanding shares for a period of at least four years. Shareholders
meeting these requirements, who wish the Nominating Committee to consider their
recommendations for nominees for the position of director, should submit their
recommendations in writing in care of Corporate Governance, Stewardship
Financial Corporation, 630 Godwin Avenue, Midland Park, New Jersey 07432.
Recommendations by shareholders meeting the share ownership requirements and
that are made in accordance with these procedures will receive the same
consideration given to nominees of the Nominating Committee.

In its assessment of each potential candidate, the Nominating Committee
will review the nominee's judgment, experience, independence, understanding of
the Corporation's or other related industries and such other factors the
Nominating Committee determines are pertinent in light of the current needs of
the Board. The Nominating Committee will also take into account the ability of a
director to devote the time and effort necessary to fulfill his or her
responsibilities.

Nominees may be suggested by directors, members of management,
shareholders or, in some cases, by a third party firm. In identifying and
considering candidates for nomination to the Board of Directors, the Nominating
Committee considers, in addition to the requirements set out in the Nominating
Committee's charter, quality of experience, the needs of the Corporation and the
range of talent and experience represented on the Board.

Personnel Committee

The Personnel Committee sets the compensation for the executive officers
of the Corporation and the Bank. Mr. Van Ostenbridge was a member of the
Personnel Committee in 2003 and is the Chief Executive Officer and President of
the Corporation and the Bank; however, he was excluded from all discussions
regarding any compensation matter related directly to him. In 2003, the
Personnel Committee consisted of directors Almroth (Chairman), Lane, Leegwater,
Turner and Van Ostenbridge.

Stock Compensation Committee

The Stock Compensation Committee recommends the issuance of stock options
in accordance with the 1995 Employee Stock Option Plan. During 2003, the Stock
Compensation Committee consisted of directors Almroth (Chairman), Lane, Vander
Eems and Van Wingerden.

Compensation Committee

In 2004, the Compensation Committee was formed to replace the Personnel
and Stock Compensation Committees. This Committee will oversee the Corporation's
compensation and employee benefit plans and practices, including its executive
compensation plans and its incentive-compensation and equity-based plans. The
Compensation Committee consists of Directors Turner (Chairperson), Lane,
Leegwater, Vander Eems, and Van Wingerden.

Independence of Directors

The Board of Directors has determined that seven of its eleven directors,
including all members of the Audit, Nominating and Compensation Committees, are
"independent" as defined in the listing standards of the NASDAQ Stock Market and
SEC rules. These seven independent directors are: Almroth, Dyer, Hanse, Lane,
Murphy, Steen and Van Wingerden.

Board and Committee Meetings

The Board of Directors of the Corporation held 14 meetings during 2003.
The Audit Committee, Nominating Committee, Personnel Committee and Stock
Compensation Committee met 10, 8, 5 and 1 time(s), respectively, during 2003.
The Board of Directors holds regularly scheduled meetings each month and special
meetings as circumstances require. All of the directors of the Corporation
attended at least 75% of the total number of Board meetings held during 2003. In
addition, each director who is a member of a committee of the Board of Directors
attended at least 75% of the meetings for each committee of which he is a
member. Each director of the Corporation is also a director of the Bank.

The Corporation expects the Directors to attend the annual meeting. The
Directors who attended the 2003 annual meeting were Almroth, Dyer, Hanse, Lane,
Leegwater, Steen, Turner, Vander Eems, Van Ostenbridge and Van Wingerden.

Communications with the Board of Directors

Shareholders are invited to contact the Directors by writing to the
Secretary of the Corporation, Robert J. Turner, at 630 Godwin Avenue, Midland
Park, New Jersey 07432. These communications are not screened.

Personnel Committee and Stock Compensation Committee Interlocks and Insider
Participation

During 2003, no executive officer of the Corporation (i) served as a
member of the Personnel Committee of another entity, one of whose executive
officers served on the Personnel Committee or Stock Compensation Committee, (ii)
served as a director of another entity, one of whose executive officers served
on the Personnel Committee or Stock Compensation Committee, or (iii) was a
member of the Personnel Committee of another entity, one of whose executive
officers served as a director of the Corporation.

Compensation of Directors

Directors' Fees

Directors of the Corporation and the Bank, other than full-time employees
of the Corporation and the Bank, receive fees of $1,400 per Board meeting
attended, with the exception of the chairman who receives $2,800 per meeting
attended. Directors of the Corporation and the Bank, other than full time
employees of the Corporation and the Bank, also receive a fee of $300 per
committee meeting attended.

Stock Option Plan for Non-Employee Directors

The Corporation maintains the Stewardship Financial Corporation 2001 Stock
Option Plan for Non-Employee Directors (the "2001 Non-Employee Plan"). The
maximum number of shares of Common Stock subject to stock options granted under
the 2001 Non-Employee Plan is 104,186 as adjusted for stock dividends and
splits. As of March 15, 2004, 83,349 options to purchase shares of Common Stock
have been granted under the 2001 Non-Employee Plan, of which 10,417 options have
been exercised. The purchase price of the shares of Common Stock subject to
options under the 2001 Non-Employee Plan is 100% of the fair market value on the
date such option is granted. The plan expires on May 9, 2011.

EXECUTIVE OFFICERS

Our executive officers are as follows:

Name Age Position
---- --- --------
Paul Van Ostenbridge 51 President and Chief Executive Officer
Julie E. Holland 44 Vice President and Treasurer
Timothy G. Madden 54 Vice President

Officers are not appointed for fixed terms. Biographical information for
our current officers who are not also directors follows.

Julie E. Holland, age 44, has been vice president and treasurer of the
Corporation since 1997. Ms. Holland joined the Bank in 1994 and has been vice
president and treasurer of the Bank since 1997.

Timothy G. Madden, age 54, has served as vice president of the Corporation
since 2002. Mr. Madden joined the Bank in 2001 and has served as its vice
president since 2001. From 1989

until 2001, Mr. Madden served as the vice president of private banking at Summit
Bank. Mr. Madden has over 30 years experience in credit, sales and management in
the commercial banking field.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth a summary of annual compensation for the
last three fiscal years for the president and chief executive officer of the
Corporation and any other executive officers whose individual remuneration
exceeded $100,000.

Annual Compensation Long Term Compensation Awards
------------------------- -----------------------------------------
Name & Securities Underlying All Other
Principal Position Year Salary ($) Bonus ($)(1) Options (#) Compensation ($)

Paul Van Ostenbridge 2003 190,000 25,000 1,050 32,625 (2)
President and Chief 2002 182,500 34,335 0 28,231
Executive Officer 2001 175,500 28,843 0 27,045

Timothy G .Madden 2003 114,660 10,631 525 17,487 (3)
Vice President and Senior 2002 110,250 14,740 0 5,295
Commercial Loan Manager 2001 105,000 500 0 0

Julie E. Holland 2003 85,500 8,137 525 13,963 (4)
Vice President and 2002 82,300 10,988 0 11,960
Treasurer 2001 79,300 9,369 0 11,582

------------

(1) Includes bonuses earned through the Executive Compensation Plan and
accrued during 2003, 2002 and 2001, which were paid in the first quarter
of the following calendar years.

(2) The amounts disclosed for Mr. Van Ostenbridge for fiscal 2003 includes
401(k) matching contributions of $4,694, profit sharing plan contributions
of $17,450, group term life insurance and long term disability payments of
$1,328, medical and vision

insurance contributions of $5,540 and the imputed value of a personal car
allowance in the amount of $3,613.

(3) The amounts disclosed for Mr. Madden for fiscal 2003 includes profit
sharing contributions of $10,950, group term life insurance and long term
disability payments of $997 and medical and vision insurance contributions
of $5,540.

(4) The amounts disclosed for Ms. Holland includes 401(k) matching
contributions of $2,113, profit sharing contributions of $8,360, group
term life insurance and long term disability payments of $761, and medical
and vision insurance contributions of $2,729.

Stock Option Grants

Option Grants in Last Fiscal Year

The following table sets forth information related to the grant of stock
options by us during the year ended December 31, 2003 to the executive officers
named in the summary compensation table.

Individual Grants
-------------------------------------------------------------
Potential Realizable Value
Number of Percent of at Assumed Annual
Securities Total Options Appreciation Rates of
Underlying Granted to Exercise or Stock Price for Option Term
Options Employees in Base Price Expiration ---------------------------
Granted Fiscal Year ($/Share) Date 5% 10%
--------------------------------------------------------------------------------------------

Paul Van Ostenbridge 1,050 11.5% $20.00 July 15, 2013 $38,483 $61,277
Timothy G. Madden 525 5.7% 20.00 July 15, 2013 19,241 30,639
Julie E. Holland 525 5.7% 20.00 July 15, 2013 19,241 30,639

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values

The following table sets forth information regarding the aggregated option
exercises during the fiscal year ended December 31, 2003, and the value of
unexercised options held as of December 31, 2003, by each executive officer
named in the Summary Compensation Table. The potential value of unexercised
in-the-money options is based on the closing per share sales price of the
Corporation's Common Stock of $22.50 on December 31, 2003.

Shares Number of Securities Underlying Value of Unexcercised
Acquired on Value Unexercised Options at December In-the-Money Options December
Name Exercise (#) Realized ($) 31, 2003 (#) 31, 2003 ($)
----------------------------------------------------- --------------------------------- ------------------------------------
Exercisable Unexercisable Exercisable Unexercisable

Paul Van Ostenbridge 0 0 28,732 3,198 $449,314 $29,271

Timothy G. Madden 0 0 0 525 0 1,313

Julie E. Holland 1,654 10,146 6,938 1,062 107,694 7,974

Employee Stock Option Plan. The Corporation maintains the Stewardship Financial
Corporation 1995 Stock Option Plan (the "Employee Plan"). Under the Employee
Plan, 135,685 shares of Common Stock have been reserved for issuance. As of
March 15, 2004, 64,866 options to purchase shares of Common Stock have been
granted under the Employee Plan. Employees of the Corporation, the Bank, and any
subsidiaries which the Corporation may incorporate or acquire are eligible to
participate in the Employee Plan. The Stock Compensation Committee manages the
Employee Plan and selects participants from the eligible employees. No options
granted under the Employee Plan may be exercised more than 10 years after the
date of its grant. The purchase price for shares of Common Stock subject to
options under the Plan may not be less than 100% of the fair market value on the
date such options are granted.

Employee Stock Purchase Plan. The Corporation maintains the Stewardship
Financial Corporation 1995 Employee Stock Purchase Plan (the "Purchase Plan").
Under the Purchase Plan, 150,760 shares of Common Stock have been reserved for
issuance. As of March 15, 2004, 17,998 shares of Common Stock have been
purchased under the Purchase Plan. Shares acquired under the Purchase Plan may
be obtained, at the discretion of the Corporation, from the authorized but
unissued shares of Common Stock, treasury stock or from the open market.
Employees of the Corporation, the Bank and any subsidiaries which the
Corporation may incorporate or acquire, who work at least 20 hours per week, are
eligible to participate in the Purchase Plan. Shares are purchased for
participants through payroll deductions in a maximum amount of 10% of a
participant's total compensation per pay period. Eligible employees must notify
the Bank of their participation in the Purchase Plan and the amount of payroll
deductions that will be applied to purchase shares for them. The funds
contributed by each participant are used to purchase shares of Common Stock at
95% of the fair market value.

PERSONNEL Committee Report on Executive Compensation

The Bank maintains a Personnel Committee, which oversees executive
compensation issues. The compensation payable to the Bank's executive officers
is determined by the Board of Directors of the Bank upon recommendation of the
Personnel Committee, without the participation of Mr. Van Ostenbridge on any
compensation matter related directly to him.

Executive Compensation Policy. The Bank's policy is to compensate its
executives fairly and adequately for the responsibility assumed by them for the
success and direction of the Bank, the effort expended in discharging that
responsibility and the results achieved directly or indirectly from each
executive's performance. "Fair and adequate compensation" is established after
careful review of: (i) the Bank's earnings; (ii) the Bank's performance as
compared to other companies of similar size and market area; and (iii) a
comparison of what the market demands for compensation of similarly situated and
experienced executives.

Total compensation takes into consideration a mix of base salary, bonus,
perquisites and stock options. The particular mix is established in order to
competitively attract competent professionals, retain those professionals and
reward extraordinary achievement. The Board of Directors also considers net
income for the year and earnings per share of the Corporation and the Bank
before finalizing officer compensation increases for the coming year.

Based upon its current levels of compensation, the Bank is not affected by
the provisions of the Internal Revenue Code that limit the deductibility to a
corporation of compensation in excess of $1,000,000 paid to certain executive
officers. Thus, the Bank has no policy regarding that subject.

Base Salary. The Board of Directors of the Bank bears the responsibility
for establishing base salary. Salary is minimum compensation for any particular
position and is not tied to any performance formula or standard. However, that
is not to say that poor performance will not result in termination. Acceptable
performance is expected of all executive officers as a minimum standard. To
establish salary, the following criteria are used: (i) position description;
(ii) director responsibility assumed; (iii) comparative studies of peer group
compensation (special weight is given to local factors as opposed to national
averages); (iv) earnings performance of the Bank resulting in availability of
funds; and (v) competitive level of salary to be maintained to attract and
retain qualified and experienced executives.

Stock Options. Recommendations for stock option awards are made by the
Personnel Committee to the Stock Compensation Committee, which then makes
recommendations to the entire Board of Directors for final action. The Personnel
Committee meets to evaluate meritorious performance of all officers and
employees for consideration to receive stock options.

The Personnel Committee makes awards based upon the following criteria:
(i) position of the officer or employee in the Bank; (ii) the benefit that the
Bank has derived as a result of the efforts of the award candidate under
consideration; and (iii) the Bank's desire to encourage long term employment of
the award candidate.

Perquisites, such as Corporation and Bank automobiles and their related
expenses and auxiliary insurance benefits, which the Board of Directors of the
Bank may approve from time to time, are determined and awarded pursuant to
evaluation under the same criteria used to establish base salary.

Compensation of CEO. Paul Van Ostenbridge is president and chief executive
officer of the Corporation and the Bank. Mr. Van Ostenbridge has held his
respective positions at the Corporation and the Bank since the inception of both
companies. The Corporation and the Bank have continued to make progress toward
their goals during Mr. Van Ostenbridge's tenure as president and chief executive
officer. In 2003, Mr. Van Ostenbridge's total annual salary compensation
increased 4.00% above his total annual salary compensation in 2002. The Board of
Directors determined that this increase represents fair compensation in view of
Mr. Van Ostenbridge's level of personal performance in 2003, the results
achieved by the Corporation and the Bank, and the compensation levels of other
executives in the banking industry.

It should be noted that the Board of Directors adopted the Compensation
Committee charter in February, 2004, at which time the Personnel Committee and
the Stock Compensation Committee were merged into the Compensation Committee.

Submitted by:

Personnel Committee
William Almroth, Chairperson
Margo Lane
Arie Leegwater
Robert J. Turner
Paul Van Ostenbridge

Certain Relationships and related transactions

The Bank has made in the past and, assuming continued satisfaction of
generally applicable credit standards, expects to continue to make loans to the
Corporation's and the Bank's directors and executive officers and to
corporations, organizations or other entities for which they serve as officers
or directors, or in which they have beneficial ownership interests of 10 percent
or more. These loans have all been made in the ordinary course of banking
business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than the normal risk of collectability or
present other unfavorable features.

Stock Ownership of Management and Principal Shareholders

The following table sets forth information concerning the beneficial
ownership of the Corporation's Common Stock as of March 15, 2004, by (i) each
person who is known by the Corporation to own beneficially more than 5% of the
issued and outstanding Common Stock, (ii) each director and nominee for director
of the Corporation, (iii) each executive officer of the Corporation named in the
Summary Compensation Table and (iv) all directors and executive officers of the
Corporation as a group. Other than as set forth in this table, the Corporation
is not aware of any individual or group which holds in excess of 5% of the
outstanding Common Stock. The percentage of beneficial ownership is based on
3,154,350 shares of Common Stock outstanding as of March 15, 2004.

Number of Shares Percent
Name of Beneficial Owner (1) Beneficially Owned (2) of Class
--------------------------- ---------------------- --------

William Almroth (3) 169,754 5.37%

Harold Dyer (4) 32,848 1.04%

William C. Hanse (5) 76,975 2.44%

Margo Lane (6) 27,361 *

Arie Leegwater (7) 41,242 1.31%

John J. Murphy (8) 4,358 *

John L. Steen (9) 79,871 2.53%

Robert J. Turner (10) 80,945 2.56%

William J. Vander Eems (11) 126,436 4.00%

Paul Van Ostenbridge (12) 45,579 1.43%

Abe Van Wingerden (13) 133,420 4.23%

Julie E. Holland (14) 10,203 *

Timothy G. Madden 2,453 *
-------- -----

Directors and Executive Officers
of the Corporation and Bank as a group
(13 persons) 831,445 25.72%

-------------

* Indicates less than 1% of the outstanding shares of the Corporation's
Common Stock.

(1) The address of each shareholder is c/o Stewardship Financial
Corporation, 630 Godwin Avenue, Midland Park, New Jersey 07432-1405.

(2) Beneficially owned shares include shares over which the named person
exercises either sole or shared voting power or sole or shared investment
power. They also include shares owned (i) by a spouse, minor children or
by relatives sharing the same home, (ii) by entities owned or controlled
by the named person and (iii) if the named person has the right to acquire
such shares within 60 days by the exercise of any right or option. Unless
otherwise noted, all shares are owned of record and beneficially by the
named person, either directly or through the Corporation's Dividend
Reinvestment Plan.

(3) Includes 95,570 shares held by Mr. Almroth's spouse in her own name
and 8,682 shares issuable upon exercise of stock options exercisable
within 60 days of March 15, 2004. Mr. Almroth disclaims beneficial
ownership of the interest held by his spouse.

(4) Includes 1,737 shares issuable upon exercise of stock options
exercisable within 60 days of March 15, 2004.

(5) Includes 25,551 shares held jointly by Mr. Hanse and his spouse; 6,788
shares held by Mr. Hanse's spouse in her own name; and 1,736 shares
issuable upon exercise of stock options exercisable within 60 days of
March 15, 2004. Mr. Hanse disclaims beneficial ownership of the interest
held by his spouse.

(6) Includes 7,152 shares held jointly by Mrs. Lane and her spouse; 489
shares held by Mrs. Lane's spouse as custodian for their children; and
5,209 shares issuable upon exercise of stock options exercisable within 60
days of March 15, 2004. Mrs. Lane disclaims beneficial ownership of the
interest held by her spouse.

(7) Includes 10,199 shares held jointly by Mr. Leegwater and his spouse;
14,032 shares held by trusts of which Mr. Leegwater is the trustee; and
5,209 shares issuable upon exercise of stock options exercisable within 60
days of March 15, 2004. Mr. Leegwater disclaims beneficial ownership of
the interest owned by his spouse.

(8) Includes 2,362 shares held in the name of Murphy Capital Profit
Sharing; and 1,041 shares issuable upon exercise of stock options
exercisable within 60 days of March 15, 2004.

(9) Includes 5,209 shares issuable upon exercise of stock options
exercisable within 60 days of March 15, 2004.

(10) Includes 15,988 shares held jointly by Mr. Turner and his spouse;
2,074 shares held by Mr. Turner's spouse in her own name; and 5,209 shares
issuable upon exercise of stock options exercisable within 60 days of
March 15, 2004. Mr. Turner disclaims beneficial ownership of the interest
held by his spouse.

(11) Includes 29,333 shares held by Mr. Vander Eems' spouse in her own
name; 7,340 shares held by Mr. Vander Eems as custodian for his children;
and 5,209 shares issuable upon exercise of stock options exercisable
within 60 days of March 15, 2004. Mr. Vander Eems disclaims beneficial
ownership of the interest held by his spouse.

(12) Includes 30,151 shares issuable upon exercise of stock options
exercisable within 60 days of March 15, 2004.

(13) Includes 111,712 shares held by Mr. Van Wingerden and his spouse.
Includes 1,737 shares issuable upon exercise of stock options exercisable
within 60 days of March 15, 2004. Mr. Van Wingerden disclaims beneficial
ownership of the interest held by his spouse.

(14) Includes 7,292 shares issuable upon exercise of stock options
exercisable within 60 days of March 15, 2004.

PROPOSAL 2 -- AMENDMENT OF CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED SHARES OF COMMON STOCK

General

In February 2004, the Corporation's Board of Directors approved an
amendment of the Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 5,000,000 to 10,000,000 shares. A copy of
the amendment is attached to this Proxy Statement as Exhibit D.

The Board of Directors recommends that you vote FOR the amendment of the
Certificate of Incorporation to increase authorized shares of Common Stock.

Purposes and Effects of Proposed Increase in the Number of Authorized Shares of
Common Stock.

The proposed amendment would increase the number of shares of Common Stock
which the Corporation is authorized to issue from 5,000,000 to 10,000,000. The
additional 5,000,000 shares would be part of the existing class of Common Stock
and, if and when issued, would have the same rights and privileges as the shares
of Common Stock presently issued and outstanding.

The Board of Directors believes it is in the best interests of the
Corporation to increase the number of authorized shares of Common Stock to
provide the Corporation with adequate flexibility in the future. If this
proposal is approved by the shareholders, the increased number of authorized
shares of Common Stock will be available for issuance from time to time for such
purposes and consideration as the Board of Directors may approve without further
shareholder approval except as required by applicable law and the rules of any
stock exchange, automated quotation system or other quotation service where the
Common Stock is listed or quoted. Such purposes include the issuance of shares
under the Corporation's dividend reinvestment plan, the grant of options to
purchase Common Stock to the Corporation's employees, directors and consultants,
as well as the issuance of Common Stock in connection with financing
transactions, acquisitions and public and private offerings. The Corporation has
no immediate agreements, commitments or understandings with respect to the
issuance of any of the additional shares of Common Stock that would be
authorized by the proposed amendment, although opportunities for additional
issuance could arise at any time. The availability of additional shares of
Common Stock for issuance without the delay and expense of obtaining shareholder
approval will afford the Corporation greater flexibility in acting upon
opportunities and transactions, if any, which may arise in the future.

Adoption of the amendment to the Certificate of Incorporation and any
issuance of additional shares of Common Stock will not affect the rights of the
holders of currently outstanding Common Stock, except for the effects incidental
to increasing the number of shares of Common Stock outstanding, such as dilution
of ownership and earnings per share.

If approved, the amendment to the Certificate of Incorporation will become
effective on the date when the amendment of the Certificate of Incorporation is
filed with the State of New Jersey.

Certain Anti-Takeover Effects

At the present time, the Corporation is not aware of any pending or
threatened efforts by any third party to obtain control of the Corporation and
the amendment to the Certificate of Incorporation is not proposed as the result
of any such efforts. However, the availability for issuance of additional shares
of Common Stock may discourage an attempt to obtain control of the Corporation
or may make a takeover attempt more difficult.

Vote Required and Board Recommendation.

The affirmative vote of holders of a majority of shares of Common Stock
entitled to vote at the Annual Meeting is required to approve the proposed
amendment.

Report of the Audit Committee

The role of the Audit Committee is to assist the Board of Directors in its
oversight of the quality and integrity of the Corporation's financial reporting
process. We meet with both the independent auditors and the internal auditors,
each of whom has unrestricted access to the committee. We also meet with
management periodically to consider the adequacy of the Corporation's internal
controls and the objectivity of its financial reporting. We discuss these
matters with the independent auditors, internal auditors and appropriate
financial personnel of the Corporation.

The directors who serve on the committee are all "independent" for the
purposes of Rule 4200(a)(14) of the NASDAQ's listing standards. That is, the
Board of Directors has determined that none of us has a relationship with the
Corporation and the Bank that may interfere with our independence from the
Corporation and its management.

Management has primary responsibility for the Corporation's financial
statements and the overall reporting process, including the Corporation's system
of internal controls. The independent auditors audit the financial statements
prepared by management, express an opinion as to whether those financial
statements fairly present the financial position, results of operations, and
cash flows of the Corporation in conformity with generally accepted accounting
principles and discuss with us any issues they believe should be raised with us.

This year, we reviewed the Corporation's audited financial statements and
met with both management and KPMG LLP, the Corporation's independent auditors,
to discuss those financial statements. Management has represented to us that the
financial statements were prepared in accordance with generally accepted
accounting principles.

We have received from and discussed with KPMG LLP the written disclosure
and the letter required by Independence Standards Boards No. 1 (Independence
Discussions with Audit Committees). These items relate to that firm's
independence from the Corporation. We also discussed with KPMG LLP any matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).

Based on these reviews and discussions, we recommended to the Board that
the Corporation's audited financial statements be included in the Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31, 2003.

Submitted by:

Audit Committee

Harold Dyer, Chairperson
William M. Almroth
John J. Murphy
John L. Steen
Robert J. Turner

INDEPENDENT AUDITORS

The Audit Committee of the Board of Directors of the Corporation and the
Bank has recommended the retention of KPMG LLP to act as independent public
accountants for the Corporation and the Bank for the fiscal year ending 2004.
KPMG LLP has acted as the Corporation's and the Bank's independent public
accountants for the fiscal years ended December 31, 1996 through 2003.

KPMG LLP has advised the Corporation that one or more of its
representatives will be present at the Annual Meeting to make a statement if
they so desire and to respond to appropriate questions.

Audit Fees

The aggregate fees billed for professional services by KPMG LLP in
connection with the audit of the financial statements for the fiscal year ended
2003, and the reviews of the financial statements for each of the first three
fiscal quarters in 2003, were approximately $61,000. The aggregate fees billed
for professional services by KPMG LLP in connection with the audit of the
financial statements for the fiscal year ended 2002, and the reviews of the
financial statements for each of the first three fiscal quarters in 2002, were
approximately $63,030.

Audit-Related Fees

There were no fees billed for audit-related fees by KPMG LLP for the
fiscal years ended 2003 and 2002, respectively.

Tax Fees

KPMG LLP billed the Corporation $20,500 and $22,500 in for the fiscal
years ended 2003 and 2002, respectively, for tax compliance services.

All Other Fees

There were no other fees billed by KPMG LLP for the fiscal years ended
2003 and 2002, respectively.

The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the independence of KPMG LLP.

Pre-Approval of Audit and Permissible Non-Audit Services

The Audit Committee pre-approves all audit and permissible non-audit
services provided by the independent auditors. These services may include audit
services, audit-related services, tax services and other services. The Audit
Committee has adopted a policy for the pre-approval of services provided by the
independent auditors. Under the policy, pre-approval is generally provided for
up to one year and any pre-approval is detailed as to the particular service or
category of services and is subject to a specific budget. In addition, the Audit
Committee may pre-approve particular services on a case-by-case basis. For each
proposed service, the independent auditor is required to provide detailed
back-up documentation at the time of approval. All audit and permissible
non-audit services provided by KPMG LLP to the Corporation for the fiscal years
ended 2003 and 2002 were approved by the Audit Committee.

PERFORMANCE GRAPH

The Performance Line Graph presents the total return to the Corporation's
shareholders for the period December 31, 1998 through December 31, 2003. The
Corporation's Common Stock is compared to the Nasdaq Composite Index and a peer
group consisting of ten banks located in the Mid-Atlantic region with total
asset size similar to that of the Corporation. The peer group consists of First
Washington Financial Corporation, Mid Penn Bancorp Inc., 1st Constitution
Bancorp, Community Bancorp of New Jersey, Sussex Bancorp., Eagle Bancorp Inc.,
SVB Financial Services, Inc., Unity Bancorp, Inc., Sterling Bank and Juniata
Valley Bancorp. The information in this graph is not necessarily indicative of
the Corporation's future performance.

[Insert Graph Here]

COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and directors, and persons who own more than 10% of a
registered class of the Corporation's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than 10% shareholders are required by regulation
of the Securities and Exchange Commission to furnish the Corporation with copies
of all Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Corporation believes
that, during the fiscal year ended December 31, 2003, all filing requirements
applicable to its officers, directors and greater than 10% shareholders were
timely met.

ANNUAL REPORT ON FORM 10-K

The Corporation will furnish without charge its annual report on Form 10-K
upon receipt of your written request therefore. Requests should be sent to the
Secretary of the Corporation at 630 Godwin Avenue, Midland Park, New Jersey
07432.

SHAREHOLDER PROPOSALS

Shareholders who wish to present proposals to be included in the
Corporation's 2005 proxy materials must submit such proposals to the Secretary
of the Corporation at 630 Godwin Avenue, Midland Park, New Jersey 07432 by
December 8, 2004. For any proposal that is not submitted for inclusion in next
year's proxy materials, but is instead sought to be presented directly at the
2005 Annual Meeting, SEC rules permit the Corporation to exercise discretionary
voting authority to the extent conferred by proxy if the Corporation: (1)
receives notice of the proposal before February 20, 2005 and advises
shareholders in the 2005 proxy statement of the nature of the proposal and how
management intends to vote on such matter or (2) does not receive notice of the
proposal before February 20, 2005. Notices of intention to present proposals at
the 2005 Annual Meeting should be submitted to the Secretary of the Corporation
at 630 Godwin Avenue, Midland Park, New Jersey 07432.

OTHER MATTERS

The Board of Directors is not aware of any other matters which may come
before the Annual Meeting; however, in the event such other matters come before
the meeting, it is the intention of the persons named in the proxy to vote on
any such matters in accordance with the recommendation of the Board of
Directors.

APPENDIX A

AMENDED AND RESTATED
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
STEWARDSHIP FINANCIAL CORPORATION
ADOPTED AS OF FEBRUARY 17, 2004

--------------------------------------------------------------------------------

I. PURPOSE OF THE COMMITTEE

The purpose of the Audit Committee (the "Committee") of the Board of Directors
(the "Board") of Stewardship Financial Corporation (the "Corporation") is to
oversee the accounting and financial reporting processes of the Corporation and
its subsidiaries and the audits of the financial statements of the Corporation.

II. COMPOSITION OF THE COMMITTEE

The Committee shall consist of three or more directors, as determined from time
to time by the Board on recommendation of the Nominating Committee. Each member
of the Committee shall be qualified to serve on the Committee pursuant to the
requirements of The Nasdaq Stock Market, Inc. ("Nasdaq"), and any additional
requirements that the Board deems appropriate; provided, however, that
notwithstanding the foregoing, members shall not be required to be "independent"
within the meaning of the Nasdaq rules until after January 1, 2005. Members of
the Committee shall be appointed annually for a one-year term (or, if a
successor has not been duly appointed, until a successor is appointed).

The chairperson of the Committee shall be designated by the Board,
provided that if the Board does not so designate a chairperson, the members of
the Committee, by a majority vote, may designate a chairperson.

Any vacancy on the Committee shall be filled by the Board. No member of
the Committee shall be removed except by the Board.

Each member of the Committee must be able to read and understand fundamental
financial statements, including the Corporation's balance sheet, income
statement and cash flow statement. In addition, at least one member of the
Committee shall have the level of accounting or related financial management
expertise which is required under applicable law and rules and regulations
promulgated by the Securities and Exchange Commission (the "SEC") and Nasdaq.

III. MEETINGS OF THE COMMITTEE

The Committee shall meet as often as it determines necessary to carry out its
duties and responsibilities, but no less frequently than once every fiscal
quarter. The Committee, in its discretion, may ask members of management or
others to attend its meetings (or portions thereof) and to provide pertinent
information as necessary. The Committee should meet separately on a periodic
basis (but at least annually) with (i) management, (ii) the Corporation's
internal auditors and (iii) the Corporation's independent auditors, in each case
to discuss any matters that the Committee or any of the above persons or firms
believe warrant Committee attention.

A-1

The Committee shall maintain minutes of its meetings and records relating to
those meetings and periodically report to the Board on significant results of
the activities of the Committee. The Committee chairperson shall prepare and/or
approve an agenda in advance of each meeting.

IV. DUTIES AND RESPONSIBILITIES OF THE COMMITTEE

In carrying out its duties and responsibilities, the Committee's policies and
procedures should remain flexible, so that it may be in a position to best
address, react or respond to changing circumstances or conditions. The following
duties and responsibilities are within the authority of the Committee and the
Committee shall, consistent with and subject to applicable law and rules and
regulations promulgated by the SEC, Nasdaq, or any other applicable regulatory
authority:

Selection, Evaluation, and Oversight of the Auditors

(a) Be directly responsible for the appointment, compensation, retention
and oversight of the work of any registered public accounting firm engaged for
the purpose of preparing or issuing an audit report or performing other audit,
review or attest services for the Corporation, and each such registered public
accounting firm must report directly to the Committee (the registered public
accounting firm engaged for the purpose of preparing or issuing an audit report
for inclusion in the Corporation's Annual Report on Form 10-K is referred to
herein as the "independent auditors");

(b) Review and, in its sole discretion, approve in advance the
Corporation's independent auditors' annual engagement letter, including the
proposed fees contained therein, as well as all audit and, as provided in the
Sarbanes-Oxley Act of 2002 (the "Act") and the SEC rules and regulations
promulgated thereunder, all permitted non-audit engagements and relationships
between the Corporation and such independent auditors (which approval should be
made after receiving input from the Corporation's management, if desired).
Approval of audit and permitted non-audit services will be made by the
Committee;

(c) Review the performance of the Corporation's independent auditors,
including the lead partner of the independent auditors, and, in its sole
discretion, make decisions regarding the replacement or termination of the
independent auditors when circumstances warrant;

(d) Evaluate the independence of the Corporation's independent auditors
by, among other things:

(i) obtaining and reviewing from the Corporation's independent
auditors a formal written statement delineating all
relationships between the independent auditors and the
Corporation, consistent with Independence Standards Board
Standard 1;

(ii) actively engaging in a dialogue with the Corporation's
independent auditors with respect to any disclosed
relationships, compensation or services that may impact the
objectivity and independence of the auditors;

(iii) taking, or recommending that the Board take, appropriate
action to oversee the independence of the Corporation's
independent auditors;

A-2

(iv) monitoring compliance by the Corporation's independent
auditors with the audit partner rotation requirements
contained in the Act and the rules and regulations promulgated
by the SEC thereunder; and

(v) monitoring compliance by the Corporation of the employee
conflict of interest requirements contained in the Act and the
rules and regulations promulgated by the SEC thereunder;

Oversight of Annual Audit and Quarterly Reviews

(e) Review and discuss with the independent auditors their annual audit
plan, including the timing and scope of audit activities, and monitor such
plan's progress and results during the year;

(f) Review with management, the Corporation's independent auditors and the
Corporation's internal auditors, the following information which is require to
be reported by the independent auditor:

(i) all critical accounting policies and practices to be used;

(ii) all alternative treatments of financial information that have
been discussed by the independent auditors and management,
ramifications of the use of such alternative disclosures and
treatments, and the treatment preferred by the independent
auditors;

(iii) all other material written communications between the
independent auditors and management, such as any management
letter and any schedule of unadjusted differences; and

(iv) any material financial arrangements of the Corporation which
do not appear on the financial statements of the Corporation;

(g) Resolve all disagreements between the Corporation's independent
auditors and management regarding financial reporting;

Oversight of Financial Reporting Process and Internal Controls

(h) Review:

(i) the adequacy and effectiveness of the Corporation's accounting and
internal control policies and procedures on a regular basis,
including the responsibilities, budget, compensation and staffing of
the Corporation's internal audit function, through inquiry and
discussions with the Corporation's independent auditors, management
and the Corporation's internal auditors;

(ii) the yearly report prepared by management, and attested to by the
Corporation's independent auditors, assessing the effectiveness of
the Corporation's internal control over financial reporting and
stating management's responsibility for establishing and maintaining
adequate

A-3

internal control over financial reporting prior to its inclusion in
the Corporation's Annual Report on Form 10-K; and

(iii) the Committee's level of involvement and interaction with the
Corporation's internal audit function, including the Committee's
line of authority and role in appointing the internal auditors;

(i) Review with the chief executive officer, chief financial officer and
independent auditors, periodically, the following:

(i) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
Corporation's ability to record, process, summarize and report
financial information; and

(ii) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
Corporation's internal control over financial reporting;

(j) Discuss guidelines and policies governing the process by which senior
management of the Corporation, the relevant departments of the Corporation and
the Corporation's internal auditors, assess and manage the Corporation's
exposure to risk, as well as the Corporation's major financial risk exposures
and the steps management has taken to monitor and control such exposures;

(k) Review with management the progress and results of all internal audit
projects, and, when deemed necessary or appropriate by the Committee, direct the
Corporation's chief executive officer to assign additional internal audit
projects to the Corporation's internal auditors;

(l) Receive periodic reports from the Corporation's independent auditors,
management and the Corporation's internal auditors to assess the impact on the
Corporation of significant accounting or financial reporting developments that
may have a bearing on the Corporation;

(m) Review and discuss with the independent auditors the results of the
year-end audit of the Corporation, including any comments or recommendations of
the Corporation's independent auditors and, based on such review and discussions
and on such other considerations as it determines appropriate, recommend to the
Board whether the Corporation's financial statements should be included in the
Annual Report on Form 10-K and in the Corporation's proxy statement;

(n) Review and give final approval for the final version of the
Corporation's proxy statement prior to the printing of such proxy statement;

(o) Establish and maintain free and open means of communication between
and among the Committee, the Corporation's independent auditors, the
Corporation's internal auditors and management, including providing such parties
with appropriate opportunities to meet separately and privately with the
Committee on a periodic basis;

A-4

Miscellaneous

(p) Establish and implement policies and procedures for the Committee's
review and approval or disapproval of proposed transactions or courses of
dealings with respect to which executive officers or directors or members of
their immediate families have an interest (including all transactions required
to be disclosed by Item 404(a) of Regulation S-K);

(q) Meet periodically, but at least annually, with the general counsel,
and outside counsel when appropriate, to review legal and regulatory matters,
including (i) any matters that may have a material impact on the financial
statements of the Corporation, (ii) any inquiries received from regulators or
governmental agencies and (iii) any matters involving potential or ongoing
material violations of law or breaches of fiduciary duty by the Corporation or
any of its directors, officers, employees, or agents or breaches of fiduciary
duty to the Corporation;

(r) Prepare the report required by the rules of the SEC to be included in
the Corporation's annual proxy statement;

(s) Review the Corporation's policies relating to the ethical handling of
conflicts of interest and review past or proposed transactions between the
Corporation and members of management as well as policies and procedures with
respect to officers' expense accounts and perquisites, including the use of
corporate assets. The Committee shall consider the results of any review of
these policies and procedures by the Corporation's independent auditors;

(t) Review and approve in advance any services provided by the
Corporation's independent auditors to the Corporation's executive officers or
members of their immediate family;

(u) Establish "whistle-blower" policies, including procedures for (i) the
receipt, retention and treatment of complaints received by the Corporation
regarding accounting, internal accounting controls or auditing matters, and (ii)
the confidential, anonymous submission by employees of the Corporation of
concerns regarding questionable accounting or auditing matters;

(v) Secure independent expert advice to the extent the Committee
determines it to be appropriate, including retaining, with or without Board
approval, independent counsel, accountants, consultants or others, to assist the
Committee in fulfilling its duties and responsibilities, the cost of such
independent expert advisors to be borne by the Corporation;

(w) Review and assess the adequacy of this Charter on an annual basis;

(x) Perform such additional activities, and consider such other matters,
within the scope of its responsibilities, as the Committee or the Board deems
necessary or appropriate.

V. INVESTIGATIONS AND STUDIES; OUTSIDE ADVISERS

A-5

EXHIBIT B

CHARTER OF THE NOMINATING COMMITTEE
OF THE BOARD OF DIRECTORS OF
STEWARDSHIP FINANCIAL CORPORATION
ADOPTED AS OF FEBRUARY 17, 2004

--------------------------------------------------------------------------------

I. PURPOSE OF THE COMMITTEE

The purposes of the Nominating Committee (the "Committee") of the Board of
Directors (the "Board") of Stewardship Financial Corporation (the "Corporation")
shall be to identify and to recommend to the Board individuals qualified to
serve as directors of the Corporation and on the Audit Committee of the Board;
and to advise the Board with respect to the Board composition and nominating
procedures.

II. COMPOSITION OF THE COMMITTEE

The Committee shall consist of three or more directors, as determined from
time to time by the Board, and such directors shall have been proposed by the
chairperson of the Board upon the advice and consent of the members of the
Executive Committee and the review of the Nominating Committee. Members of the
Committee shall be appointed annually for a one-year term (or, if a successor
has not been duly appointed, until a successor is appointed).

Any vacancy on the Committee shall be filled by the Board. No member of
the Committee shall be removed except by the Board.

III. MEETINGS AND PROCEDURES OF THE COMMITTEE

The Committee shall meet as often as it determines necessary to carry out
its duties and responsibilities, but no less frequently than annually. The
Committee, in its discretion, may ask members of management or others to attend
its meetings (or portions thereof) and to provide pertinent information as
necessary.

The Committee may form subcommittees for any purpose that the Committee
deems appropriate and may delegate to such subcommittees such power and
authority as the Committee deems appropriate; provided, however, that no
subcommittee shall consist of fewer than two members; and provided further that
the Committee shall not delegate to a subcommittee any power or authority
required by any law, regulation or listing standard to be exercised by the
Committee as a whole.

B-1

A majority of the members of the Committee present in person or by means
of a conference telephone or other communications equipment by means of which
all persons participating in the meeting can hear each other shall constitute a
quorum.

The Committee shall maintain minutes of its meetings and records relating
to those meetings and shall report regularly to the Board on its activities, as
appropriate.

IV. DUTIES AND RESPONSIBILITIES OF THE COMMITTEE

A. Board Candidates and Nominees

The Committee shall have the following duties and responsibilities with
respect to Board candidates and nominees:

(a) To assist in identifying, recruiting and, if appropriate, interviewing
candidates to fill positions on the Board, including persons suggested by
stockholders or others. The Committee may, if it deems appropriate, establish
procedures to be followed by stockholders in submitting recommendations for
Board candidates.

(b) To review the background and qualifications of individuals being
considered as director candidates. Among the qualifications considered in the
selection of candidates, the Committee shall look at the following attributes
and criteria of candidates: experience, skills, expertise, diversity, personal
and professional integrity, character, business judgment, time availability in
light of other commitments, dedication, conflicts of interest and such other
relevant factors that the Committee considers appropriate in the context of the
needs of the Board.

(c) To recommend to the Board the director nominees for election by the
stockholders or appointment by the Board, as the case may be, pursuant to the
Bylaws of the Corporation, which recommendations shall be consistent with the
criteria for selecting directors established by the Board from time to time.

(d) To review the suitability for continued service as a director of each
Board member when his or her term expires and when he or she has a change in
status, including but not limited to an employment change, and to recommend
whether or not the director should be re-nominated.

B. Board Composition and Procedures

The Committee shall have the following duties and responsibilities with
respect to the composition and procedures of the Board as a whole:

(a) To review annually with the Board the composition of the Board as a
whole and to recommend, if necessary, measures to be taken so that the Board
reflects the appropriate balance of knowledge, experience, skills, expertise and
diversity required for the Board as a whole and contains at least the minimum
number of independent directors required by Nasdaq.

(b) To review periodically the size of the Board and to recommend to the
Board any appropriate changes.

(c) To make recommendations concerning any other aspect of the procedures
of the Board respecting nominations and governance that the Committee considers
warranted, including

B-2

but not limited to procedures with respect to the waiver by the Board of any
Corporation rule, guideline, procedure or corporate governance principle.

C. Audit Committee

The Committee shall have duty and responsibility to make recommendations
to the Board regarding the size and composition of the Audit Committee,
including the identification of individuals qualified to serve as members of the
Audit Committee, and to recommend individual directors to fill any vacancy that
might occur on Audit Committee.

V. INVESTIGATIONS AND STUDIES; OUTSIDE ADVISERS

The Committee may conduct or authorize investigations into or studies of
matters within the Committee's scope of responsibilities, and may retain, at the
Corporation's expense, such independent counsel or other consultants or advisers
as it deems necessary. The Committee shall have the sole authority to retain or
terminate any search firm to be used to identify director candidates, including
sole authority to approve the search firm's fees and other retention terms, such
fees to be borne by the Corporation. The Committee shall keep the Corporation's
finance department advised as to the general range of expenses anticipated for
independent counsel and other consultants and advisors.

B-3

EXHIBIT C

CHARTER OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS OF
STEWARDSHIP FINANCIAL CORPORATION
ADOPTED AS OF FEBRUARY 17, 2004

--------------------------------------------------------------------------------

II. PURPOSE OF THE COMMITTEE

The purposes of the Compensation Committee (the "Committee") of the Board
of Directors (the "Board") of Stewardship Financial Corporation (the
"Corporation") shall be to oversee the Corporation's compensation and employee
benefit plans and practices, including its executive compensation plans and its
incentive-compensation and equity-based plans; and to produce a Committee report
on executive compensation as required by the Securities and Exchange Commission
("SEC") to be included in the Corporation's annual proxy statement or annual
report on Form 10-K filed with the SEC.

III. COMPOSITION OF THE COMMITTEE

The Committee shall consist of three or more directors as determined from
time to time by the Board, and such directors shall have been proposed by the
chairperson of the Board upon the advice and consent of the members of the
Executive Committee and the review of the Nominating Committee. Members of the
Committee shall be appointed annually for a one-year term (or, if a successor
has not been duly appointed, until a successor is appointed).

Each member of the Committee shall be qualified to serve on the Committee
pursuant to the requirements of The Nasdaq Stock Market, Inc. ("Nasdaq"), and
any additional requirements that the Board deems appropriate; provided, however,
that notwithstanding the foregoing, members shall not be required to be
"independent" within the meaning of the Nasdaq rules until after January 1,
2005. Members of the Committee shall also qualify as "non-employee directors"
within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended, and "outside directors" within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended, and shall satisfy any
other necessary standards of independence under the federal securities and tax
laws.

Any vacancy on the Committee shall be filled by the Board. No member of
the Committee shall be removed except by the Board.

IV. MEETINGS AND PROCEDURES OF THE COMMITTEE

C-1

The Committee shall maintain minutes of its meetings and records relating
to those meetings and shall report regularly to the Board on its activities, as
appropriate.

V. DUTIES AND RESPONSIBILITIES OF THE COMMITTEE

A. Executive Compensation

The Committee shall have the following duties and responsibilities with
respect to the Corporation's executive compensation plans:

(a) To review at least annually the goals and objectives of the
Corporation's executive compensation plans, and amend, or recommend that the
Board amend, these goals and objectives if the Committee deems it appropriate.

(b) To review at least annually the Corporation's executive compensation
plans in light of the Corporation's goals and objectives with respect to such
plans, and, if the Committee deems it appropriate, adopt, or recommend to the
Board the adoption of, new, or the amendment of existing, executive compensation
plans.

(c) To evaluate annually the performance of the Chief Executive Officer in
light of the goals and objectives of the Corporation's executive compensation
plans, and determine and approve, or recommend to the Board for its approval,
the Chief Executive Officer's compensation level based on this evaluation. In
determining the long-term incentive component of the Chief Executive Officer's
compensation, the Committee shall consider all relevant factors, including the
Corporation's performance and relative stockholder return, the value of similar
awards to chief executive officers of comparable companies, and the awards given
to the Chief Executive Officer of the Corporation in past years. The Committee
shall discuss the Chief Executive Officer's compensation with the Board.

(d) To evaluate annually the performance of the other executive officers
of the Corporation in light of the goals and objectives of the Corporation's
executive compensation plans, and determine and approve, or recommend to the
Board for its approval, the compensation of such other executive officers. To
the extent that long-term incentive compensation is a component of such
executive officer's compensation, the Committee shall consider all relevant
factors in determining the appropriate level of such compensation, including the
factors applicable with respect to the Chief Executive Officer.

(e) To evaluate annually the appropriate level of compensation for Board
and Committee service by non-employee members of the Board.

C-2

(f) To review and approve any severance or termination arrangements to be
made with any executive officer of the Corporation.

(g) To perform such duties and responsibilities as may be assigned to the
Board or the Committee under the terms of any executive compensation plan.

(h) To review perquisites or other personal benefits to the Corporation's
executive officers and recommend any changes to the Board.

(i) To produce a Committee report on executive compensation as required by
the SEC to be included in the Corporation's annual proxy statement or annual
report on Form 10-K filed with the SEC.

B. General Compensation and Employee Benefit Plans

The Committee shall have the following duties and responsibilities with
respect to the Corporation's general compensation and employee benefit plans,
including incentive-compensation and equity-based plans:

(a) To review at least annually the goals and objectives of the
Corporation's general compensation plans and other employee benefit plans,
including incentive-compensation and equity-based plans, and amend, or recommend
that the Board amend, these goals and objectives if the Committee deems it
appropriate.

(b) To review at least annually the Corporation's general compensation
plans and other employee benefit plans, including incentive-compensation and
equity-based plans, in light of the goals and objectives of these plans, and
recommend that the Board amend these plans if the Committee deems it
appropriate.

(c) To review all equity-compensation plans to be submitted for
stockholder approval under the Nasdaq listing standards, and to review and, in
the Committee's sole discretion, approve all equity-compensation plans that are
exempt from such stockholder approval requirement.

(d) To perform such duties and responsibilities as may be assigned to the
Board or the Committee under the terms of any compensation or other employee
benefit plan, including any incentive-compensation or equity-based plan.

V. INVESTIGATIONS AND STUDIES; OUTSIDE ADVISERS

The Committee may conduct or authorize investigations into or studies of
matters within the Committee's scope of responsibilities, and may retain, at the
Corporation's expense, such independent counsel or other consultants or advisers
as it deems necessary. The Committee shall have the sole authority to retain or
terminate any compensation consultant to assist the Committee in carrying out
its responsibilities, including sole authority to approve the consultant's fees
and other retention terms, such fees to be borne by the Corporation. The
Committee shall keep the Corporation's finance department advised as to the
general range of expenses anticipated for independent counsel and other
consultants and advisors.

C-3

EXHIBIT D

CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION

STEWARDSHIP FINANCIAL CORPORATION

Pursuant to the provisions of Section 14A:9-2 (4) and Section 14A:9-4 (3),
Corporations, General, of the New Jersey Statutes, the undersigned corporation
executes the following Certificate of Amendment to its Certificate of
Incorporation:

1. The name of the corporation is STEWARDSHIP FINANCIAL CORPORATION (the
"Corporation").

2. The following amendment to the Certificate of Incorporation was
approved by the directors of the Corporation on ____________, 2004, and duly
adopted by the shareholders of the Corporation on ____________, 2004:

RESOLVED, that Article V of the Certificate of Incorporation of
Stewardship Financial Corporation is amended to read in its entirety as follows:

ARTICLE V
Capital Stock

The Corporation is authorized to issue 10,000,000 shares of common stock,
without par value.

3. The total number of shares outstanding at the time of the adoption of
the amendment was ____________ (____). The total number of shares entitled to
vote thereon was _____________ (____), of which ___________ (_____) voted in
favor of the amendment, ___________ (_______) voted against the amendment, and
___________ (________) abstained from voting on the amendment.

4. The effective time of the amendment herein certified shall be the date
of filing of this Certificate of Amendment.

IN WITNESS WHEREOF, the Corporation has caused this certificate to be
executed on its behalf by its duly authorized officer this ____ day of _______,
2004.

STEWARDSHIP FINANCIAL CORPORATION

By:
-------------------------------
Paul Van Ostenbridge
President

D-1

Stewardship Financial Corporation
Five Year Total Return

[THE FOLLOWING TABLES WERE REPRESENTED BY A LINE GRAPH
IN THE PRINTED MATERIAL.]

Nasdaq
SSFN Composite Index Peer Index FWFC MBP CVLY PFIS

12/31/98 100.00 100.00 100.00 100.00 100.00 100.00 100.00
12/31/99 110.99 185.95 93.30 127.75 91.47 105.00 83.20
12/31/00 108.42 113.19 79.36 88.75 91.20 90.54 104.49
12/31/01 124.54 89.64 107.98 178.27 109.15 94.27 106.43
12/31/02 129.70 61.67 143.34 254.41 194.76 103.70 109.02
12/31/03 240.43 92.90 184.20 290.44 257.87 169.78 176.46

SSFN SVBF UNTY STNJ EGBN JUVF MBP

12/31/98 100.00 100.00 100.00 100.00 100.00 100.00 100.00
12/31/99 110.99 87.91 56.64 82.50 102.44 90.81 105.24
12/31/00 108.42 88.46 18.88 61.03 102.13 73.83 74.31
12/31/01 124.54 107.79 61.36 61.19 173.29 93.95 94.13
12/31/02 129.70 183.17 77.78 60.78 233.22 98.63 117.92
12/31/03 240.43 190.55 113.59 82.48 301.68 119.71 139.47

Peers = FCCY, CBNJ, FWFC, SBB, SVBF, UNTY, STNJ, EGBN, JUVF, MBP = 7 NJ-based
commercial banks close in asset size for which historical stock price data was
available for the relevant time period; 1 MD-based commercial bank (EGBN) and 2
PA-based commercial banks (JUVF, MBP) close in asset size with comparable
operating performance in terms of return on average equity and return on average
assets.