Northern States Financial Corporation Reports First Quarter

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News Desk 2018

Apr 19, 2017 at 9:00 AM 70

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 ended	March 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
	Average		Yield/		Average			Yield/		Average			Yield/		Average			Yield/		Average			Yield/
	balance		Rate		balance			Rate		balance			Rate		balance			Rate		balance			Rate
Earning assets
Loans	$	289,085	4.37	%		$	283,029	4.40	%		$	269,395	4.49	%		$	254,545	4.67	%		$	238,327	4.69	%
Securities taxable		75,361	1.88				81,382	1.73				84,128	1.81				88,592	1.70				98,630	1.70
Securities tax-exempt		0	0.00				283	5.65				295	6.78				295	5.42				295	6.78
Interest-bearing deposits		73,051	0.88				86,056	0.67				96,358	0.68				92,069	0.56				95,565	0.60
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	$	63,870	0.11	%		$	73,467	0.08	%		$	75,295	0.06	%		$	72,646	0.09	%		$	67,804	0.08	%
Money market deposits		48,322	0.05				55,072	0.05				56,168	0.05				52,475	0.05				52,205	0.05
Savings deposits		90,626	0.01				89,400	0.01				89,082	0.01				89,415	0.01				86,031	0.01
Time deposits		85,014	0.29				86,655	0.28				91,003	0.29				89,727	0.30				96,323	0.31
Other borrowings		37,737	0.82				35,613	0.84				30,669	0.89				26,040	1.01				28,338	0.90
Total interest-bearing liabilities		325,569	0.20	%			340,207	0.19	%			342,217	0.18	%			330,303	0.19	%			330,701	0.19	%
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 spread			3.16	%				3.02	%				2.99	%				3.01	%				2.92	%
Net interest margin			3.21	%				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

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