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Northern States Financial Corporation Reports First Quarter Earnings

WAUKEGAN, Ill., April 19, 2017 (GLOBE NEWSWIRE) -- Northern States Financial Corporation (OTC PINK:NSFC) (the “Company”), holding company for NorStates Bank (the “Bank”), an FDIC insured financial institution, today reported first quarter 2017 net income after tax of $370 thousand, an increase of $49 thousand, or 15.3%, compared with first quarter 2016 net income after tax of $321 thousand. The Company’s per share book value at March 31, 2017 was $0.65.

Some highlights of continued financial improvement during the first quarter of 2017 included the following:

  • Average loans increased by $50.8 million for the first quarter of 2017 compared with the first quarter of 2016. Loan interest income increased $360 thousand for the first quarter of 2017 compared to the first quarter of 2016. The increased loan interest income contributed to a net interest margin for the first quarter of 2017 of 3.21%.
  • 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, decreased by $499 thousand from December 31, 2016 to March 31, 2017. At March 31, 2017, the allowance for loan and lease losses to total loans and leases ratio was 1.94%.
  • Although first quarter 2017 noninterest income decreased $35 thousand compared to the first quarter of 2016, noninterest income during the first quarter of 2016 included a gain of $117 thousand on the sale of investment securities. After discounting this gain, noninterest income would have increased $82 thousand in the first quarter of 2017 compared with the same quarter of 2016.
  • The Company focused on growing core deposits consisting of personal and business non-time deposits. Core deposits increased $9.9 million, or 3.7%, at March 31, 2017 from December 31, 2016. Core deposits growth assisted the Company in maintaining a low cost of funds during the first quarter of 2017 at 15 basis points with the Bank’s cost of funds at 8 basis points.

“We expect future income to be positively affected by our continued deployment of excess liquidity and focus on the reduction of expenses and NPAs,” stated Scott Yelvington, President and Chief Executive Officer.

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 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
March 31, December 31, September 30, June 30, March 31,
For the quarter ended 2017 2016 2016 2016 2016
Net income available to common stockholders$370 $983 $483 $354 $321
Basic income per average outstanding share 0.00 0.01 0.01 0.00 0.00
Diluted income per average outstanding share 0.00 0.01 0.01 0.00 0.00
Return on average assets 0.30% 0.78% 0.38% 0.29% 0.26%
Return on average equity 2.52% 6.85% 3.38% 2.50% 2.28%
Yield on interest-earning assets 3.36% 3.21% 3.17% 3.20% 3.11%
Cost of interest-bearing liabilities 0.20% 0.19% 0.18% 0.19% 0.19%
Net interest spread 3.16% 3.02% 2.99% 3.01% 2.92%
Net interest margin 3.21% 3.07% 3.03% 3.06% 2.96%
Net charged-off (recovered) loans$56 $54 $(407) $168 $418
Net charged-off loans to average loans (annualized) 0.08% 0.08% (0.60)% 0.26% 0.70%
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Total stockholders' equity$59,047 $58,460 $57,258 $56,868 $56,431
Book value per common share$0.65 $0.65 $0.65 $0.65 $0.64
Common shares outstanding 90,345,174 90,345,174 87,604,088 87,604,088 87,604,088
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Nonperforming assets
Loans on nonaccrual status$2,878 $2,990 $3,054 $3,465 $4,504
Loans 90 days or more past due, still accruing 140 309 0 0 700
Loan troubled debt restructurings 5,309 5,465 5,584 5,415 5,477
Total nonperforming loans 8,327 8,764 8,638 8,880 10,681
Other real estate owned 10,174 10,236 10,958 11,418 13,100
Total nonperforming assets$18,501 $19,000 $19,596 $20,298 $23,781
Nonperforming assets excluding trouble debt restructurings$13,192 $13,535 $14,012 $14,883 $18,304
Nonperforming loans to total assets 1.68% 1.79% 1.70% 1.78% 2.19%
Nonperforming assets to total assets 3.74% 3.88% 3.85% 4.06% 4.88%
Nonperforming assets excluding trouble debt restructurings to total assets 2.67% 2.76% 2.76% 2.98% 3.75%
Allowance for loan and lease losses to total loans 1.94% 1.97% 2.10% 2.05% 2.20%

NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
Condensed Consolidated Balance Sheet March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Assets
Cash and due from banks$4,853 $4,552 $5,491 $4,965 $5,539
Interest bearing deposits in financial institutions - maturities less than 90 days 47,132 41,179 61,013 66,743 53,004
Total cash and cash equivalents 51,985 45,731 66,504 71,708 58,543
Interest bearing deposits in financial institutions - maturities of 90 days or greater 30,510 29,233 33,880 31,049 31,377
Securities available for sale 59,640 63,180 71,341 69,689 78,416
Securities held to maturity 12,926 12,996 13,360 13,428 13,496
Loans and leases, net of deferred fees 290,801 289,594 274,281 264,244 254,545
Less: Allowance for loan and lease losses (5,647) (5,703) (5,757) (5,425) (5,593)
Loans and leases, net 285,154 283,891 268,524 258,819 248,952
Federal Home Loan Bank stock 335 931 931 931 931
Office buildings and equipment, net 8,674 8,525 8,425 8,519 8,415
Other real estate owned 10,174 10,236 10,958 11,418 13,100
Accrued interest receivable 1,255 1,247 1,297 1,173 1,243
Bank owned life insurance 10,675 10,597 10,520 10,439 10,358
Deferred tax asset, net 22,202 22,436 21,461 21,479 22,112
Other assets 1,055 985 1,252 1,112 746
Total assets$494,585 $489,988 $508,453 $499,764 $487,689
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing deposits$106,096 $100,870 $99,245 $102,097 $96,829
Interest-bearing deposits 290,899 289,940 314,834 307,334 301,926
Total deposits 396,995 390,810 414,079 409,431 398,755
Securities sold under repurchase agreements 22,820 25,901 23,686 18,015 16,052
Subordinated debentures 10,310 10,310 10,310 10,310 10,310
Advances from borrowers for taxes and insurance 2,820 1,902 510 2,195 3,089
Accrued interest payable and other liabilities 2,593 2,605 2,610 2,945 3,052
Total liabilities 435,538 431,528 451,195 442,896 431,258
Stockholders' Equity
Common stock 906 906 878 878 878
Deferred compensation (1,155) (1,260) 0 0 0
Additional paid-in capital 34,019 34,019 32,088 32,088 32,088
Retained earnings 25,678 25,308 28,858 28,375 28,021
Treasury stock, at cost (182) (182) (4,674) (4,674) (4,674)
Accumulated other comprehensive income (loss), net (219) (331) 108 201 118
Total stockholders' equity 59,047 58,460 57,258 56,868 56,431
Total liabilities and stockholders' equity$494,585 $489,988 $508,453 $499,764 $487,689
Common shares outstanding 90,345,174 90,345,174 87,604,088 87,604,088 87,604,088
Book value per common share$0.65 $0.65 $0.65 $0.65 $0.64

NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
Condensed Consolidated Statement of Income
For the quarter endedMarch 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Interest income
Loans (including fee income)$3,148 $3,103 $3,010 $2,963 $2,788
Securities
Taxable 357 353 378 377 420
Exempt from federal income tax 0 3 3 3 3
Federal funds sold and other 160 145 163 130 144
Total interest income 3,665 3,604 3,554 3,473 3,355
Interest expense
Time deposits 61 61 67 68 74
Other deposits 25 23 21 24 23
Repurchase agreements and federal funds purchased 1 1 0 0 1
Subordinated debentures 76 74 68 66 63
Total interest expense 163 159 156 158 161
Net interest income 3,502 3,445 3,398 3,315 3,194
Provision for loan and lease losses 0 0 (75) 0 0
Net interest income after provision for loan and lease losses 3,502 3,445 3,473 3,315 3,194
Noninterest income
Service fees on deposits 380 403 398 320 320
Gain on sale of securities 0 0 0 104 117
Net gain (loss) on sale of other real estate owned (4) 68 (7) 126 13
Bank owned life insurance income 78 78 80 82 53
Other operating income 395 424 419 416 381
Total noninterest income 849 973 890 1,048 884
Noninterest expense
Salaries and employee benefits 1,945 2,593 1,787 1,861 1,822
Occupancy and equipment, net 486 557 490 520 502
Data processing 456 490 325 427 459
Legal 23 72 28 81 19
FDIC insurance 30 45 76 118 101
Audit and other professional 181 169 125 151 168
Printing and supplies expense 51 42 44 45 37
Write-down of other real estate owned 0 55 487 126 0
Other real estate owned expense 330 164 92 171 131
Other operating expenses 317 326 297 309 305
Total noninterest expense 3,819 4,513 3,751 3,809 3,544
Net income before income taxes 532 (95) 612 554 534
Income tax expense 162 (1,078) 129 200 213
Net income 370 983 483 354 321
Average common shares outstanding 90,345,174 87,961,621 87,604,088 87,604,088 87,604,088
Basic income per average outstanding share$0.00 $0.01 $0.01 $0.00 $0.00
Diluted income per average outstanding share$0.00 $0.01 $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,
2017 2016 2016 2016 2016
Loans
Commercial$27,462 $28,179 $14,977 $12,556 $11,883
Real estate-construction 26,534 26,975 22,255 17,531 15,369
Real estate-mortgage 1-4 family 50,533 48,593 47,826 49,530 41,499
Real estate-mortgage 5+ family 59,331 59,272 56,179 49,321 46,458
Real estate-mortgage commercial 118,917 115,514 121,491 123,717 129,042
Home equity 7,428 10,411 10,955 10,965 9,671
Installment 892 949 873 893 904
Deferred loan fees (296) (299) (275) (269) (281)
Total loans$290,801 $289,594 $274,281 $264,244 $254,545
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Deposits
Demand - noninterest bearing$106,096 $100,870 $99,245 $102,097 $96,829
Demand - interest bearing 64,951 70,127 78,310 75,389 67,678
Money market accounts 50,161 48,231 56,921 54,297 52,032
Savings 91,861 90,095 88,578 88,813 88,826
Time, over $250,000 30,651 26,510 33,613 29,332 32,459
Time, $250,000 and under 53,275 54,977 57,412 59,503 60,931
Total deposits$396,995 $390,810 $414,079 $409,431 $398,755

NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
1Q 2017 4Q 2016 3Q 2016 2Q 2016 1Q 2016
AverageYield/ AverageYield/ AverageYield/ AverageYield/ AverageYield/
balanceRate balanceRate balanceRate balanceRate balanceRate
Earning assets
Loans$289,0854.37% $283,0294.40% $269,3954.49% $254,5454.67% $238,3274.69%
Securities taxable 75,3611.88 81,3821.73 84,1281.81 88,5921.70 98,6301.70
Securities tax-exempt 00.00 2835.65 2956.78 2955.42 2956.78
Interest-bearing deposits 73,0510.88 86,0560.67 96,3580.68 92,0690.56 95,5650.60
Total earning assets 437,497 3.36% 450,750 3.21% 450,176 3.17% 435,501 3.20% 432,817 3.11%
Non interest earning assets 53,678 53,461 53,823 55,761 51,891
Total assets$491,175 $504,211 $503,999 $491,262 $484,708
Interest-bearing liabilities
Interest-bearing demand deposits$63,8700.11% $73,4670.08% $75,2950.06% $72,6460.09% $67,8040.08%
Money market deposits 48,3220.05 55,0720.05 56,1680.05 52,4750.05 52,2050.05
Savings deposits 90,6260.01 89,4000.01 89,0820.01 89,4150.01 86,0310.01
Time deposits 85,0140.29 86,6550.28 91,0030.29 89,7270.30 96,3230.31
Other borrowings 37,7370.82 35,6130.84 30,6690.89 26,0401.01 28,3380.90
Total interest-bearing liabilities 325,5690.20% 340,2070.19% 342,2170.18% 330,3030.19% 330,7010.19%
Demand deposits 101,689 102,406 100,066 98,491 92,377
Other liabilities 5,201 4,175 4,547 5,932 5,406
Stockholders' equity 58,716 57,423 57,169 56,536 56,224
Total liabilities and stockholders' equity $491,175 $504,211 $503,999 $491,262 $484,708
Net interest spread3.16% 3.02% 2.99% 3.01% 2.92%
Net interest margin3.21% 3.07% 3.03% 3.06% 2.96%


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