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Northern States Financial Corporation Reports Third Quarter 2016 Earnings

WAUKEGAN, Ill., Oct. 31, 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 third quarter 2016 net income of $483,000 as compared with $354,000 for the second quarter 2016 and $514,000 for the third quarter of 2015. Per share book value at September 30, 2016 was $0.65.

Pretax income for the third quarter of 2016 was $612,000 as compared with pretax income of $564,000 for the same quarter of 2015, an increase of 8.5%. Income tax expense for the third quarter of 2016 was $129,000 as compared with $50,000 for the same quarter of 2015 due to the effect of the Company’s application of deferred tax assets in the third quarter of 2015. For the nine months ended September 30, 2016, pretax income was $1,700,000 as compared with pretax income of $1,151,000 for the first nine months of 2015, an increase of 47.7%.

Total assets of the Company were $508 million at September 30, 2016, an increase of $23 million, or 4.8%, from December 31, 2015. Loans increased $37 million, or 15.6%, between December 31, 2015 and September 30, 2016 while deposits increased $19 million, or 4.7%, between those dates.

The Bank’s third quarter 2016 net interest margin was 3.09%, compared with 3.03% during the third quarter of 2015. The Bank’s cost of interest-bearing liabilities was 0.11% in the third quarter of 2016, compared with 0.13% in the third quarter of 2015. The Bank’s leverage capital ratio at September 30, 2016 was 10.61%.

With regard to asset quality, the Company’s non-performing assets (“NPAs”) at September 30, 2016 decreased $5.6 million, or 22.08%, from December 31, 2015, due primarily to a reduction in loans on nonaccrual status and other real estate owned. At September 30, 2016, the ratio of nonperforming loans to total assets was 1.70% and the allowance for loan and lease losses to total loans was 2.10%.

“We continue to make 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, cost reduction and the profitable deployment of liquidity.”

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.

NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
Key Performance Data
September 30, June 30, March 31, December 31, September 30,
For the quarter ended 2016 2016 2016 2015 2015
Net income available to common stockholders$ 483 $ 354 $ 321 $ 22,043 $ 514
Basic income per average outstanding share 0.01 0.00 0.00 0.25 0.01
Diluted income per average outstanding share 0.01 0.00 0.00 0.25 0.01
Return on average assets 0.38% 0.29% 0.26% 18.89% 0.45%
Return on average equity 3.38% 2.50% 2.28% 253.24% 6.13%
Yield on interest earning assets 3.17% 3.20% 3.11% 3.30% 3.13%
Cost of interest-bearing liabilities 0.18% 0.19% 0.19% 0.19% 0.20%
Net interest spread 2.99% 3.01% 2.92% 3.11% 2.93%
Net interest margin 3.03% 3.06% 2.96% 3.15% 2.97%
Net charged-off (recovered) loans$ (407) $ 168 $ 418 $ 231 $ 803
Net charged-off loans to average loans (annualized) (0.60)% 0.26% 0.70% 0.40% 1.38%
September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Total stockholders' equity$ 57,258 $ 56,868 $ 56,431 $ 55,673 $ 34,135
Book value per common share$ 0.65 $ 0.65 $ 0.64 $ 0.64 $ 0.39
Common shares outstanding 87,604,088 87,604,088 87,604,088 87,604,088 87,604,088
September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Nonperforming assets
Loans on nonaccrual status$ 3,054 $ 3,465 $ 4,504 $ 5,469 $ 8,986
Loans 90 days or more past due, still accruing 0 0 700 787 266
Loan troubled debt restructurings 5,584 5,415 5,477 6,312 2,380
Total nonperforming loans 8,638 8,880 10,681 12,568 11,632
Other real estate owned 10,958 11,418 13,100 12,579 17,173
Total nonperforming assets$ 19,596 $ 20,298 $ 23,781 $ 25,147 $ 28,805
Nonperforming assets excluding trouble debt
restructurings$ 14,012 $ 14,883 $ 18,304 $ 18,835 $ 26,425
Nonperforming loans to total assets 1.70% 1.78% 2.19% 2.59% 2.52%
Nonperforming assets to total assets 3.85% 4.06% 4.88% 5.18% 6.23%
Nonperforming assets excluding trouble debt
restructurings to total assets 2.76% 2.98% 3.75% 3.88% 5.72%
Allowance for loan and lease losses to total loans 2.10% 2.05% 2.20% 2.53% 3.02%


NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
Condensed Consolidated Balance Sheet September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Assets
Cash and due from banks$ 5,491 $ 4,965 $ 5,539 $ 5,834 $ 8,092
Interest bearing deposits in financial institutions -
maturities less than 90 days 61,013 66,743 53,004 55,380 63,044
Total cash and cash equivalents 66,504 71,708 58,543 61,214 71,136
Interest bearing deposits in financial institutions -
maturities of 90 days or greater 33,880 31,049 31,377 33,786 16,057
Securities available for sale 71,341 69,689 78,416 97,788 106,593
Securities held to maturity 13,360 13,428 13,496 10,564 10,771
Loans and leases, net of deferred fees 274,281 264,244 254,545 237,327 232,847
Less: Allowance for loan and lease losses (5,757) (5,425) (5,593) (6,011) (7,032)
Loans and leases, net 268,524 258,819 248,952 231,316 225,815
Federal Home Loan Bank stock 931 931 931 931 931
Office buildings and equipment, net 8,425 8,519 8,415 7,776 6,373
Other real estate owned 10,958 11,418 13,100 12,579 17,173
Accrued interest receivable 1,297 1,173 1,243 1,275 1,211
Bank owned life insurance 10,520 10,439 10,358 5,054 5,014
Deferred tax asset, net 21,461 21,479 22,112 21,869 (80)
Other assets 1,252 1,112 746 1,195 1,022
Total assets $ 508,453 $ 499,764 $ 487,689 $ 485,347 $ 462,016
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing deposits $ 99,245 $ 102,097 $ 96,829 $ 93,913 $ 84,823
Interest-bearing deposits 314,834 307,334 301,926 301,509 309,432
Total deposits 414,079 409,431 398,755 395,422 394,255
Securities sold under repurchase agreements 23,686 18,015 16,052 18,994 19,618
Subordinated debentures 10,310 10,310 10,310 10,310 10,310
Advances from borrowers for taxes and insurance 510 2,195 3,089 2,195 776
Accrued interest payable and other liabilities 2,610 2,945 3,052 2,753 2,922
Total liabilities 451,195 442,896 431,258 429,674 427,881
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 28,858 28,375 28,021 27,700 5,657
Treasury stock, at cost (4,674) (4,674) (4,674) (4,674) (4,674)
Accumulated other comprehensive income (loss), net 108 201 118 (319) 186
Total stockholders' equity 57,258 56,868 56,431 55,673 34,135
Total liabilities and stockholders' equity$ 508,453 $ 499,764 $ 487,689 $ 485,347 $ 462,016
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 $ 0.65 $ 0.64 $ 0.64 $ 0.39

NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
Condensed Consolidated Statement of Income
For the quarter endedSeptember 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Interest income
Loans (including fee income) $ 3,010 $ 2,963 $ 2,788 $ 3,005 $ 2,747
Securities
Taxable 378 377 420 491 544
Exempt from federal income tax 3 3 3 4 4
Federal funds sold and other 163 130 144 97 52
Total interest income 3,554 3,473 3,355 3,597 3,347
Interest expense
Time deposits 67 68 74 79 82
Other deposits 21 24 23 24 24
Repurchase agreements and federal funds purchased 0 0 1 1 0
Subordinated debentures 68 66 63 58 57
Total interest expense 156 158 161 162 163
Net interest income 3,398 3,315 3,194 3,435 3,184
Provision for loan and lease losses (75) 0 0 (789) 0
Net interest income after provision for
loan and lease losses 3,473 3,315 3,194 4,224 3,184
Noninterest income
Service fees on deposits 398 320 320 319 316
Gain on sale of securities 0 104 117 0 0
Net gain on sale of other assets 0 0 0 18 1,423
Net gain (loss) on sale of other real estate owned (7) 126 13 22 0
Bank owned life insurance income 80 82 53 40 14
Other operating income 419 416 381 419 428
Total noninterest income 890 1,048 884 818 2,181
Noninterest expense
Salaries and employee benefits 1,787 1,861 1,822 1,940 1,712
Occupancy and equipment, net 490 520 502 526 527
Data processing 325 427 459 234 501
Legal 28 81 19 52 51
FDIC insurance 76 118 101 98 96
Audit and other professional 125 151 168 151 143
Printing and supplies expense 44 45 37 36 42
Write-down of other real estate owned 487 126 0 1,282 1,264
Other real estate owned expense 92 171 131 97 136
Other operating expenses 297 309 305 303 329
Total noninterest expense 3,751 3,809 3,544 4,719 4,801
Net income before income taxes 612 554 534 323 564
Income tax expense 129 200 213 (21,720) 50
Net income 483 354 321 22,043 514
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 $ 0.01 $ 0.00 $ 0.00 $ 0.25 $ 0.01
Diluted income per average outstanding share$ 0.01 $ 0.00 $ 0.00 $ 0.25 $ 0.01


NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Loans
Commercial$ 14,977 $ 12,556 $ 11,883 $ 12,144 $ 14,019
Real estate-construction 22,255 17,531 15,369 21,609 15,127
Real estate-mortgage 1-4 family 47,826 49,530 41,499 28,449 27,977
Real estate-mortgage 5+ family 56,179 49,321 46,458 39,417 38,971
Real estate-mortgage commercial 121,491 123,717 129,042 125,978 126,375
Home equity 10,955 10,965 9,671 8,953 9,526
Installment 873 893 904 1,047 1,041
Deferred loan fees (275) (269) (281) (270) (189)
Total loans$ 274,281 $ 264,244 $ 254,545 $ 237,327 $ 232,847
September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Deposits
Demand - noninterest bearing $ 99,245 $ 102,097 $ 96,829 $ 93,913 $ 84,823
Demand - interest bearing 78,310 75,389 67,678 67,571 72,612
Money market accounts 56,921 54,297 52,032 51,797 54,077
Savings 88,578 88,813 88,826 84,515 83,153
Time, $100,000 and over 50,716 46,989 50,442 53,093 52,744
Time, under $100,000 40,309 41,846 42,948 44,283 45,846
Time, brokered 0 0 0 250 1,000
Total deposits $ 414,079 $ 409,431 $ 398,755 $ 395,422 $ 394,255


NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
3Q 2016 2Q 2016 1Q 2016 4Q 2015 3Q 2015
AverageYield/ AverageYield/ AverageYield/ AverageYield/ AverageYield/
balanceRate balanceRate balanceRate balanceRate balanceRate
Earning assets
Loans$269,395 4.49%$254,545 4.67%$238,327 4.69%$232,821 5.18%$232,003 4.76%
Securities taxable 84,128 1.81 88,592 1.70 98,630 1.70 112,635 1.74 124,301 1.75
Securities tax-exempt 295 6.78 295 5.42 295 6.78 428 5.61 436 6.42
Interest-bearing deposits 96,358 0.68 92,069 0.56 95,565 0.60 91,402 0.42 73,330 0.28
Total earning assets 450,176 3.17% 435,501 3.20% 432,817 3.11% 437,286 3.30% 430,070 3.13%
Non interest earning assets 53,823 55,761 51,891 29,467 26,427
Total assets $ 503,999 $491,262 $484,708 $466,753 $456,497
Interest-bearing liabilities
Interest-bearing demand deposits $ 75,295 0.06%$ 72,646 0.09%$ 67,804 0.08%$ 71,437 0.08%$ 68,681 0.09%
Money market deposits 56,168 0.05 52,475 0.05 52,205 0.05 53,107 0.05 52,291 0.05
Savings deposits 89,082 0.01 89,415 0.01 86,031 0.01 83,536 0.01 82,482 0.01
Time deposits 91,003 0.29 89,727 0.30 96,323 0.31 98,661 0.32 101,783 0.32
Other borrowings 30,669 0.89 26,040 1.01 28,338 0.90 30,559 0.77 28,085 0.81
Total interest-bearing liabilities 342,217 0.18% 330,303 0.19% 330,701 0.19% 337,300 0.19% 333,322 0.20%
Demand deposits 100,066 98,491 92,377 90,408 85,324
Other liabilities 4,547 5,932 5,406 4,228 4,308
Stockholders' equity 57,169 56,536 56,224 34,817 33,543
Total liabilities and stockholders' equity$ 503,999 $ 491,262 $ 484,708 $ 466,753 $ 456,497
Net interest spread2.99%3.01%2.92%3.11%2.93%
Net interest margin3.03%3.06%2.96%3.15%2.97%


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

Source:Northern States Financial Corporation