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Northern States Financial Corporation Reports First Quarter Earnings

WAUKEGAN, Ill., May 10, 2016 (GLOBE NEWSWIRE) -- Northern States Financial Corporation (OTCQB:NSFC) (the “Company”), holding company for NorStates Bank (the “Bank”), an FDIC insured financial institution, today reported first quarter 2016 pretax income of $534 thousand as compared with pretax income of $180 thousand for the same quarter of 2015. First quarter 2016 net income after tax was $321 thousand while first quarter 2015 net income after tax remained $180 thousand due to the Company’s tax position during that quarter. The Company’s per share book value at March 31, 2016 was $0.64.

Total assets of the Company were $488 million at March 31, 2016, increasing $2 million from year-end 2015. Loan volume increased $17 million, or 7.25%, during the first quarter of 2016 while deposits increased $3 million. The Bank’s first quarter 2016 net interest margin was 3.03% with a cost of funds of 0.12%. The Bank’s leverage capital ratio was 10.98%.

With regard to asset quality, the Company’s non-performing assets (“NPAs”), consisting of nonaccrual loans, ninety days or more past due loans still accruing, loans considered troubled debt restructurings and other real estate owned (“OREO”), were reduced by $1.4 million from December 31, 2015 to March 31, 2016. OREO increased slightly during the quarter primarily due to a multifamily property that was foreclosed upon. This property currently has a sales contract that is expected to close during the second quarter of 2016. All other categories of NPAs at March 31, 2016 showed reductions totaling $1.9 million from year-end 2015. At March 31, 2016, the allowance for loan and lease losses to total loans and leases ratio was 2.20%.

“We are pleased with our growth in assets and profitability as loan generation remains strong,” stated Scott Yelvington, President and Chief Executive Officer. “Credit quality remains a focus as we look to continue the reduction in NPA’s in coming quarters.”

About Northern States Financial Corporation

Northern States Financial Corporation is the holding company for NorStates Bank, a full-service commercial bank with eight branches in Lake County, Illinois. NorStates Bank is the successor to financial institutions dating to 1919. NorStates Bank serves the populations of northeastern Illinois and southeastern Wisconsin.

Forward-Looking Information

This release may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include, but are not necessarily limited to, fluctuations in interest rates, inflation, government regulations, general economic conditions, competition within the business areas in which the Company conducts its operations including the real estate market in Illinois, and other factors beyond the Company’s control. Such risks and uncertainties could cause actual results for subsequent interim periods or for the entire year to differ materially from those expressed or implied by any forward-looking statement. Readers should not place undue reliance on the forward-looking statements, which reflect management’s beliefs, expectations and assumptions only as of the date hereof. The Company undertakes no obligation to update statements to reflect new information or subsequent events or circumstances.

Websites: www.nsfc.com www.nsfc.net

NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
Key Performance Data
March 31, December 31, September 30, June 30, March 31,
For the quarter ended 2016 2015 2015 2015 2015
Net income available to common stockholders$ 321 $ 22,043 $ 514 $ 392 $ 180
Basic income per average outstanding share 0.00 0.25 0.01 0.00 0.00
Diluted income per average outstanding share 0.00 0.25 0.01 0.00 0.00
Return on average assets 0.26% 18.89% 0.45% 0.36% 0.17%
Return on average equity 2.28% 253.24% 6.13% 4.73% 2.18%
Yield on interest earning assets 3.11% 3.30% 3.13% 3.13% 3.21%
Cost of interest-bearing liabilities 0.19% 0.19% 0.20% 0.19% 0.19%
Net interest spread 2.92% 3.11% 2.93% 2.94% 3.02%
Net interest margin 2.96% 3.15% 2.97% 2.98% 3.07%
Net charged-off loans$ 418 $ 231 $ 803 $ (1,681) $ 488
Net charged-off loans to average loans (annualized) 0.70% 0.40% 1.38% (2.99)% 0.89%
March 31, December 31, September 30, June 30, March 31,
2016 2015 2015 2015 2015
Total stockholders' equity$ 56,431 $ 55,673 $ 34,135 $ 33,214 $ 33,112
Book value per common share$ 0.64 $ 0.64 $ 0.39 $ 0.38 $ 0.38
Common shares outstanding 87,604,088 87,604,088 87,604,088 87,604,088 87,604,088
March 31, December 31, September 30, June 30, March 31,
2016 2015 2015 2015 2015
Nonperforming assets
Loans on nonaccrual status$ 4,504 $ 5,469 $ 8,986 $ 10,820 $ 9,715
Loans 90 days or more past due, still accruing 700 787 266 198 298
Loan troubled debt restructurings 5,477 6,312 2,380 2,400 3,742
Total nonperforming loans 10,681 12,568 11,632 13,418 13,755
Other real estate owned 13,100 12,579 17,173 17,416 19,347
Total nonperforming assets$ 23,781 $ 25,147 $ 28,805 $ 30,834 $ 33,102
Nonperforming assets excluding trouble debt restructurings$ 18,304 $ 18,835 $ 26,425 $ 28,434 $ 29,360
Nonperforming loans to total assets 2.19% 2.59% 2.52% 3.02% 3.18%
Nonperforming assets to total assets 4.88% 5.18% 6.23% 6.94% 7.66%
Nonperforming assets excluding trouble debt restructurings to total assets 3.75% 3.88% 5.72% 6.40% 6.80%
NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
Condensed Consolidated Balance Sheet March 31, December 31, September 30, June 30, March 31,
2016 2015 2015 2015 2015
Assets
Cash and due from banks$ 5,539 $ 5,834 $ 8,092 $ 4,817 $ 5,258
Interest bearing deposits in financial institutions - maturities less than 90 days 53,004 55,380 63,044 60,455 63,768
Total cash and cash equivalents 58,543 61,214 71,136 65,272 69,026
Interest bearing deposits in financial institutions - maturities of 90 days or greater 31,377 33,786 16,057 6,499 7,739
Securities available for sale 78,416 97,788 106,593 112,353 101,659
Securities held to maturity 13,496 10,564 10,771 10,838 12,069
Loans and leases, net of deferred fees 254,545 237,327 232,847 229,932 217,270
Less: Allowance for loan and lease losses (5,593) (6,011) (7,032) (7,834) (6,153)
Loans and leases, net 248,952 231,316 225,815 222,098 211,117
Federal Home Loan Bank stock 931 931 931 931 931
Office buildings and equipment, net 8,415 7,776 6,373 6,845 7,851
Other real estate owned 13,100 12,579 17,173 17,416 19,347
Accrued interest receivable 1,243 1,275 1,211 1,217 1,144
Bank owned life insurance 10,358 5,054 5,014 0 0
Deferred tax asset, net 22,112 21,869 (80) 156 5
Other assets 746 1,195 1,022 879 981
Total assets$ 487,689 $ 485,347 $ 462,016 $ 444,504 $ 431,869
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing deposits$ 96,829 $ 93,913 $ 84,823 $ 81,795 $ 77,213
Interest-bearing deposits 301,926 301,509 309,432 299,564 287,406
Total deposits 398,755 395,422 394,255 381,359 364,619
Securities sold under repurchase agreements 16,052 18,994 19,618 14,836 18,231
Subordinated debentures 10,310 10,310 10,310 10,310 10,310
Advances from borrowers for taxes and insurance 3,089 2,195 776 1,904 2,639
Accrued interest payable and other liabilities 3,052 2,753 2,922 2,881 2,958
Total liabilities 431,258 429,674 427,881 411,290 398,757
Stockholders' Equity
Common stock 878 878 878 878 878
Additional paid-in capital 32,088 32,088 32,088 32,088 32,088
Retained earnings 28,021 27,700 5,657 5,143 4,751
Treasury stock, at cost (4,674) (4,674) (4,674) (4,674) (4,674)
Accumulated other comprehensive income (loss), net 118 (319) 186 (221) 69
Total stockholders' equity 56,431 55,673 34,135 33,214 33,112
Total liabilities and stockholders' equity$ 487,689 $ 485,347 $ 462,016 $ 444,504 $ 431,869
Common shares outstanding 87,604,088 87,604,088 87,604,088 87,604,088 87,604,088
Book value per common share$ 0.64 $ 0.64 $ 0.39 $ 0.38 $ 0.38
NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
Condensed Consolidated Statement of Income
For quarter endedMarch 31, December 31, September 30, June 30, March 31,
2016 2015 2015 2015 2015
Interest income
Loans (including fee income)$ 2,788 $ 3,005 $ 2,747 $ 2,646 $ 2,484
Securities
Taxable 420 491 544 514 678
Exempt from federal income tax 3 4 4 5 4
Federal funds sold and other 144 97 52 54 36
Total interest income 3,355 3,597 3,347 3,219 3,202
Interest expense
Time deposits 74 79 82 79 71
Other deposits 23 24 24 21 22
Repurchase agreements and federal funds purchased 1 1 0 0 1
Subordinated debentures 63 58 57 55 53
Total interest expense 161 162 163 155 147
Net interest income 3,194 3,435 3,184 3,064 3,055
Provision for loan and lease losses 0 (789) 0 0 100
Net interest income after provision for loan and lease losses 3,194 4,224 3,184 3,064 2,955
Noninterest income
Service fees on deposits 320 319 316 324 321
Gain on sale of securities 117 0 0 48 122
Net gain (loss) on sale of other assets 0 18 1,423 (10) 0
Net gain (loss) on sale of other real estate owned 13 22 0 209 0
Bank owned life insurance income 53 40 14 0 0
Other operating income 381 419 428 413 385
Total noninterest income 884 818 2,181 984 828
Noninterest expense
Salaries and employee benefits 1,822 1,940 1,712 1,724 1,703
Occupancy and equipment, net 502 526 527 561 597
Data processing 459 234 501 376 330
Legal 19 52 51 117 93
FDIC insurance 101 98 96 136 141
Audit and other professional 168 151 143 162 134
Printing and supplies expense 37 36 42 63 60
Write-down of other real estate owned 0 1,282 1,264 0 0
Other real estate owned expense 131 97 136 88 170
Other operating expenses 305 303 329 414 375
Total noninterest expense 3,544 4,719 4,801 3,641 3,603
Net income (loss) before income taxes 534 323 564 407 180
Income tax expense 213 (21,720) 50 15 0
Net income (loss) 321 22,043 514 392 180
Average common shares outstanding 87,604,088 87,604,088 87,604,088 87,604,088 87,604,088
Basic income (loss) per average outstanding share$ 0.00 $ 0.25 $ 0.01 $ 0.00 $ 0.00
Diluted income (loss) per average outstanding share$ 0.00 $ 0.25 $ 0.01 $ 0.00 $ 0.00
NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
March 31, December 31, September 30, June 30, March 31,
2016 2015 2015 2015 2015
Loans
Commercial$ 11,883 $ 12,144 $ 14,019 $ 13,687 $ 10,522
Real estate-construction 15,369 21,609 15,127 14,300 11,636
Real estate-mortgage 1-4 family 41,499 28,449 27,977 29,379 30,285
Real estate-mortgage 5+ family 46,458 39,417 38,971 39,577 36,569
Real estate-mortgage commercial 129,042 125,978 126,375 123,176 118,589
Home equity 9,671 8,953 9,526 9,089 8,859
Installment 904 1,047 1,041 943 1,021
Deferred loan fees (281) (270) (189) (219) (211)
Total loans$ 254,545 $ 237,327 $ 232,847 $ 229,932 $ 217,270
March 31, December 31, September 30, June 30 March 31
2016 2015 2015 2015 2015
Deposits
Demand - noninterest bearing$ 96,829 $ 93,913 $ 84,823 $ 81,795 $ 77,213
Demand - interest bearing 67,678 67,571 72,612 65,853 57,158
Money market accounts 52,032 51,797 54,077 53,131 49,453
Savings 88,826 84,515 83,153 80,884 80,654
Time, $100,000 and over 50,442 53,093 52,744 49,223 49,655
Time, under $100,000 42,948 44,283 45,846 47,223 48,236
Time, brokered 0 250 1,000 3,250 2,250
Total deposits$ 398,755 $ 395,422 $ 394,255 $ 381,359 $ 364,619

NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
1Q 2016 4Q 2015 3Q 2015 2Q 2015 1Q 2015
AverageYield/ AverageYield/ AverageYield/ AverageYield/ AverageYield/
balanceRate balanceRate balanceRate balanceRate balanceRate
Earning assets
Loans$ 238,327 4.69%$ 232,821 5.18%$ 232,003 4.76%$224,996 4.73%$ 219,900 4.54%
Securities taxable 98,630 1.70 112,635 1.74 124,301 1.75 119,487 1.72 129,337 2.10
Securities tax-exempt 295 6.78 428 5.61 436 6.42 435 5.52 437 6.41
Interest-bearing deposits 95,565 0.60 91,402 0.42 73,330 0.28 68,449 0.32 50,803 0.28
Total earning assets 432,817 3.11% 437,286 3.30% 430,070 3.13% 413,367 3.13% 400,477 3.21%
Non interest earning assets 51,891 29,467 26,427 26,460 26,670
Total assets$484,708 $466,753 $456,497 $439,827 $427,147
Interest-bearing liabilities
Interest-bearing demand deposits$ 67,804 0.08%$ 71,437 0.08%$ 68,681 0.09%$ 61,325 0.08%$ 58,445 0.10%
Money market deposits 52,205 0.05 53,107 0.05 52,291 0.05 50,062 0.05 50,104 0.05
Savings deposits 86,031 0.01 83,536 0.01 82,482 0.01 81,353 0.01 78,445 0.01
Time deposits 96,323 0.31 98,661 0.32 101,783 0.32 99,736 0.32 94,548 0.30
Other borrowings 28,338 0.90 30,559 0.77 28,085 0.81 25,492 0.86 30,660 0.70
Total interest-bearing liabilities 330,701 0.19% 337,300 0.19% 333,322 0.20% 317,968 0.19% 312,202 0.19%
Demand deposits 92,377 90,408 85,324 83,126 76,962
Other liabilities 5,406 4,228 4,308 5,610 4,950
Stockholders' equity 56,224 34,817 33,543 33,123 33,033
Total liabilities and stockholders' equity$ 484,708 $ 466,753 $ 456,497 $ 439,827 $ 427,147
Net interest spread 2.92%3.11%2.93%2.94%3.02%
Net interest margin 2.96%3.15%2.97%2.98%3.07%


For Additional Information, Contact: Scott Yelvington, President and Chief Executive Officer (847) 775-8200 Ext. 1201

Source:Northern States Financial Corporation