Northern States Financial Corporation Reports Third Quarter

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News Desk 2018

Oct 31, 2016 at 10:45 AM

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 ended	September 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
	Average		Yield/		Average		Yield/		Average		Yield/		Average		Yield/		Average		Yield/
	balance		Rate		balance		Rate		balance		Rate		balance		Rate		balance		Rate
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 spread			2.99	%			3.01	%			2.92	%			3.11	%			2.93	%
Net interest margin			3.03	%			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

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