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Northern States Financial Corporation Reports Second Quarter 2016 Earnings

WAUKEGAN, Ill., July 26, 2016 (GLOBE NEWSWIRE) -- Northern States Financial Corporation (OTC PINK:NSFC) (the “Company”), the holding company of NorStates Bank (the “Bank”), an FDIC insured financial institution, today reported second quarter 2016 net income of $354,000 as compared with $321,000 for the first quarter 2016. Per share book value at June 30, 2016 was $0.65.

Pretax income for the second quarter of 2016 was $554,000 as compared with pretax income of $407,000 for the same quarter of 2015, an increase of 36%. Income tax expense for the second quarter of 2016 was $200,000 as compared with $15,000 for the same quarter of 2015 due to the effect of the Company’s application of deferred tax assets in the second quarter of 2015.

Total assets of the Company were $499 million at June 30, 2016, an increase of $14 million from December 31, 2015. Loans increased $27 million, or 11.34% between December 31, 2015 and June 30, 2016 while deposits increased $14 million, or 3.54%, between those dates.

The Bank’s second quarter net interest margin increased to 3.12%, compared with 3.03% during the first quarter of 2016, while the cost of funds remained unchanged at 0.12% between the periods. The Bank’s leverage capital ratio at June 30, 2016 was 10.20%.

With regard to asset quality, the Company’s non-performing assets (“NPAs”) at June 30, 2016 decreased $4.8 million, or 19.28%, from December 31, 2015, due primarily to a reduction in loans on nonaccrual status. At June 30, 2016, the ratio of nonperforming loans to total assets was 1.78% and the allowance for loan and lease losses to total loans was 2.05%.

“We are pleased with our progress regarding profitability and credit quality,” stated Scott Yelvington, President and Chief Executive Officer of the Company and Bank. “Our focus will remain on the reduction of NPAs and the profitable deployment of liquidity. We are also continuing our efforts to streamline operations to reduce costs.”

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
June 30, March 31, December 31, September 30, June 30,
For the quarter ended 2016 2016 2015 2015 2015
Net income available to common stockholders $354 $321 $22,043 $514 $392
Basic income per average outstanding share 0.00 0.00 0.25 0.01 0.00
Diluted income per average outstanding share 0.00 0.00 0.25 0.01 0.00
Return on average assets 0.29% 0.26% 18.89% 0.45% 0.36%
Return on average equity 2.50% 2.28% 253.24% 6.13% 4.73%
Yield on interest earning assets 3.20% 3.11% 3.30% 3.13% 3.13%
Cost of interest-bearing liabilities 0.19% 0.19% 0.19% 0.20% 0.19%
Net interest spread 3.01% 2.92% 3.11% 2.93% 2.94%
Net interest margin 3.06% 2.96% 3.15% 2.97% 2.98%
Net charged-off loans $168 $418 $231 $803 $(1,681)
Net charged-off loans to average loans (annualized) 0.26% 0.70% 0.40% 1.38% (2.99)%
June 30, March 31, December 31, September 30, June 30,
2016 2016 2015 2015 2015
Total stockholders' equity $56,868 $56,431 $55,673 $34,135 $33,214
Book value per common share $0.65 $0.64 $0.64 $0.39 $0.38
Common shares outstanding 87,604,088 87,604,088 87,604,088 87,604,088 87,604,088
June 30, March 31, December 31, September 30, June 30,
2016 2016 2015 2015 2015
Nonperforming assets
Loans on nonaccrual status $3,465 $4,504 $5,469 $8,986 $10,820
Loans 90 days or more past due, still accruing 0 700 787 266 198
Loan troubled debt restructurings 5,415 5,477 6,312 2,380 2,400
Total nonperforming loans 8,880 10,681 12,568 11,632 13,418
Other real estate owned 11,418 13,100 12,579 17,173 17,416
Total nonperforming assets $20,298 $23,781 $25,147 $28,805 $30,834
Nonperforming assets excluding trouble debt
restructurings $14,883 $18,304 $18,835 $26,425 $28,434
Nonperforming loans to total assets 1.78% 2.19% 2.59% 2.52% 3.02%
Nonperforming assets to total assets 4.06% 4.88% 5.18% 6.23% 6.94%
Nonperforming assets excluding trouble debt
restructurings to total assets 2.98% 3.75% 3.88% 5.72% 6.40%
Allowance for loan and lease losses to total loans 2.05% 2.20% 2.53% 3.02% 3.41%
NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
Condensed Consolidated Balance Sheet June 30, March 31, December 31, September 30, June 30,
2016 2016 2015 2015 2015
Assets
Cash and due from banks $4,965 $5,539 $5,834 $8,092 $4,817
Interest bearing deposits in financial institutions -
maturities less than 90 days 66,743 53,004 55,380 63,044 60,455
Total cash and cash equivalents 71,708 58,543 61,214 71,136 65,272
Interest bearing deposits in financial institutions -
maturities of 90 days or greater 31,049 31,377 33,786 16,057 6,499
Securities available for sale 69,689 78,416 97,788 106,593 112,353
Securities held to maturity 13,428 13,496 10,564 10,771 10,838
Loans and leases, net of deferred fees 264,244 254,545 237,327 232,847 229,932
Less: Allowance for loan and lease losses (5,425) (5,593) (6,011) (7,032) (7,834)
Loans and leases, net 258,819 248,952 231,316 225,815 222,098
Federal Home Loan Bank stock 931 931 931 931 931
Office buildings and equipment, net 8,519 8,415 7,776 6,373 6,845
Other real estate owned 11,418 13,100 12,579 17,173 17,416
Accrued interest receivable 1,173 1,243 1,275 1,211 1,217
Bank owned life insurance 10,439 10,358 5,054 5,014 0
Deferred tax asset, net 21,479 22,112 21,869 (80) 156
Other assets 1,112 746 1,195 1,022 879
Total assets $499,764 $487,689 $485,347 $462,016 $444,504
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing deposits $102,097 $96,829 $93,913 $84,823 $81,795
Interest-bearing deposits 307,334 301,926 301,509 309,432 299,564
Total deposits 409,431 398,755 395,422 394,255 381,359
Securities sold under repurchase agreements 18,015 16,052 18,994 19,618 14,836
Subordinated debentures 10,310 10,310 10,310 10,310 10,310
Advances from borrowers for taxes and insurance 2,195 3,089 2,195 776 1,904
Accrued interest payable and other liabilities 2,945 3,052 2,753 2,922 2,881
Total liabilities 442,896 431,258 429,674 427,881 411,290
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 28,375 28,021 27,700 5,657 5,143
Treasury stock, at cost (4,674) (4,674) (4,674) (4,674) (4,674)
Accumulated other comprehensive income (loss), net 201 118 (319) 186 (221)
Total stockholders' equity 56,868 56,431 55,673 34,135 33,214
Total liabilities and stockholders' equity $499,764 $487,689 $485,347 $462,016 $444,504
Common shares outstanding 87,604,088 87,604,088 87,604,088 87,604,088 87,604,088
Book value per common share $0.65 $0.64 $0.64 $0.39 $0.38
NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
Condensed Consolidated Statement of Income
For the quarter ended June 30, March 31, December 31, September 30, June 30,
2016 2016 2015 2015 2015
Interest income
Loans (including fee income) $2,963 $2,788 $3,005 $2,747 $2,646
Securities
Taxable 377 420 491 544 514
Exempt from federal income tax 3 3 4 4 5
Federal funds sold and other 130 144 97 52 54
Total interest income 3,473 3,355 3,597 3,347 3,219
Interest expense
Time deposits 68 74 79 82 79
Other deposits 24 23 24 24 21
Repurchase agreements and federal funds purchased 0 1 1 0 0
Subordinated debentures 66 63 58 57 55
Total interest expense 158 161 162 163 155
Net interest income 3,315 3,194 3,435 3,184 3,064
Provision for loan and lease losses 0 0 (789) 0 0
Net interest income after provision for
loan and lease losses 3,315 3,194 4,224 3,184 3,064
Noninterest income
Service fees on deposits 320 320 319 316 324
Gain on sale of securities 104 117 0 0 48
Net gain (loss) on sale of other assets 0 0 18 1,423 (10)
Net gain on sale of other real estate owned 126 13 22 0 209
Bank owned life insurance income 82 53 40 14 0
Other operating income 416 381 419 428 413
Total noninterest income 1,048 884 818 2,181 984
Noninterest expense
Salaries and employee benefits 1,861 1,822 1,940 1,712 1,724
Occupancy and equipment, net 520 502 526 527 561
Data processing 427 459 234 501 376
Legal 81 19 52 51 117
FDIC insurance 118 101 98 96 136
Audit and other professional 151 168 151 143 162
Printing and supplies expense 45 37 36 42 63
Write-down of other real estate owned 126 0 1,282 1,264 0
Other real estate owned expense 171 131 97 136 88
Other operating expenses 309 305 303 329 414
Total noninterest expense 3,809 3,544 4,719 4,801 3,641
Net income before income taxes 554 534 323 564 407
Income tax expense 200 213 (21,720) 50 15
Net income 354 321 22,043 514 392
Average common shares outstanding 87,604,088 87,604,088 87,604,088 87,604,088 87,604,088
Basic income per average outstanding share $0.00 $0.00 $0.25 $0.01 $0.00
Diluted income per average outstanding share $0.00 $0.00 $0.25 $0.01 $0.00
NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
June 30, March 31, December 31, September 30, June 30,
2016 2016 2015 2015 2015
Loans
Commercial $12,556 $11,883 $12,144 $14,019 $13,687
Real estate-construction 17,531 15,369 21,609 15,127 14,300
Real estate-mortgage 1-4 family 49,530 41,499 28,449 27,977 29,379
Real estate-mortgage 5+ family 49,321 46,458 39,417 38,971 39,577
Real estate-mortgage commercial 123,717 129,042 125,978 126,375 123,176
Home equity 10,965 9,671 8,953 9,526 9,089
Installment 893 904 1,047 1,041 943
Deferred loan fees (269) (281) (270) (189) (219)
Total loans $264,244 $254,545 $237,327 $232,847 $229,932
June 30, March 31, December 31, September 30, June 30
2016 2016 2015 2015 2015
Deposits
Demand - noninterest bearing $102,097 $96,829 $93,913 $84,823 $81,795
Demand - interest bearing 75,389 67,678 67,571 72,612 65,853
Money market accounts 54,297 52,032 51,797 54,077 53,131
Savings 88,813 88,826 84,515 83,153 80,884
Time, $100,000 and over 46,989 50,442 53,093 52,744 49,223
Time, under $100,000 41,846 42,948 44,283 45,846 47,223
Time, brokered 0 0 250 1,000 3,250
Total deposits $409,431 $398,755 $395,422 $394,255 $381,359


NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
2Q 2016 1Q 2016 4Q 2015 3Q 2015 2Q 2015
AverageYield/ AverageYield/ AverageYield/ AverageYield/ AverageYield/
balanceRate balanceRate balanceRate balanceRate balanceRate
Earning assets
Loans$254,545 4.67%$238,327 4.69%$232,821 5.18%$232,003 4.76%$224,996 4.73%
Securities taxable 88,592 1.70 98,630 1.70 112,635 1.74 124,301 1.75 119,487 1.72
Securities tax-exempt 295 5.42 295 6.78 428 5.61 436 6.42 435 5.52
Interest-bearing deposits 92,069 0.56 95,565 0.60 91,402 0.42 73,330 0.28 68,449 0.32
Total earning assets 435,501 3.20% 432,817 3.11% 437,286 3.30% 430,070 3.13% 413,367 3.13%
Non interest earning assets 55,761 51,891 29,467 26,427 26,460
Total assets$491,262 $484,708 $466,753 $456,497 $439,827
Interest-bearing liabilities
Interest-bearing demand deposits$72,646 0.09%$67,804 0.08%$71,437 0.08%$68,681 0.09%$61,325 0.08%
Money market deposits 52,475 0.05 52,205 0.05 53,107 0.05 52,291 0.05 50,062 0.05
Savings deposits 89,415 0.01 86,031 0.01 83,536 0.01 82,482 0.01 81,353 0.01
Time deposits 89,727 0.30 96,323 0.31 98,661 0.32 101,783 0.32 99,736 0.32
Other borrowings 26,040 1.01 28,338 0.90 30,559 0.77 28,085 0.81 25,492 0.86
Total interest-bearing liabilities 330,303 0.19% 330,701 0.19% 337,300 0.19% 333,322 0.20% 317,968 0.19%
Demand deposits 98,491 92,377 90,408 85,324 83,126
Other liabilities 5,932 5,406 4,228 4,308 5,610
Stockholders' equity 56,536 56,224 34,817 33,543 33,123
Total liabilities and stockholders' equity$491,262 $484,708 $466,753 $456,497 $439,827
Net interest spread 3.01% 2.92% 3.11% 2.93% 2.94%
Net interest margin 3.06% 2.96% 3.15% 2.97% 2.98%

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

Source:Northern States Financial Corporation