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Northern States Financial Corporation Reports 2016 Net Income of $2.1 million

WAUKEGAN, Ill., Feb. 09, 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 annual net income for 2016 available to stockholders of $2,141,000, or $0.02 per share.

The Company’s net income for 2016 was positively impacted by the reversal of a portion of the Company’s deferred tax allowance which allowed the booking of a $1.0 million tax credit during the fourth quarter of 2016.  Partially offsetting this increase in net income was stock compensation expense of $840,000, as stock awards were issued during the fourth quarter of 2016 pursuant to the stockholder-approved 2015 Restricted Stock Plan.  In 2015, the Company recognized a $21.7 million tax credit due to the reversal of a significant portion of the Company’s deferred tax allowance and had no stock compensation expense, resulting in net income available to stockholders of $23.1 million or $0.26 per share for 2015.  

Pretax income for 2016 was $1,605,000 as compared with pretax income for 2015 of $1,474,000.  Per share book value at December 31, 2016 was $0.65.  After excluding the stock compensation expense, pretax income would have been $2,445,000, an increase of 65.9% from 2015.

For the three months ended December 31, 2016, net income was $983,000, which included tax credits from the $1.0 million reversal of the deferred tax allowance and stock compensation expense of $840,000.  The Company had a pretax loss of $95,000 for the quarter ended December 31, 2016 as compared with pretax income of $323,000 for the same quarter of 2015.  After excluding the stock compensation expense, pretax income would have been $745,000 for the three months ended December 31, 2016. 

Assets of the Company increased $4.6 million to $490.0 million at December 31, 2016 from December 31, 2015.  The Company increased its loans by 22.0% to $289.6 million at December 31, 2016 from $237.3 million at December 31, 2015.  Total deposits decreased 1.2% to $390.8 million at December 31, 2016 compared to $395.4 million at December 31, 2015 as total time deposits decreased 16.5% between the same dates.

In regard to credit quality, total nonperforming loans decreased 30.3% to $8.8 million at December 31, 2016 compared with December 31, 2015.  Other real estate owned decreased 18.6%, between the same dates, to $10.2 million at December 31, 2016.

“The Company continues to focus on non-performing asset (“NPA”) reduction and earnings,” stated Scott Yelvington, President and Chief Executive Officer of the Company.  “We are pleased with our progress on both fronts in 2016 as we were able to reduce NPAs as a percentage of total assets to 3.9% at year-end 2016 from 5.2% at year-end 2015.  Solid earnings growth has allowed us to recapture an additional $1.0 million of the deferred tax allowance, enhancing the share value of our Company.  We also showed solid increases to loans and growth to our core deposits as we continued to profitably deploy our excess 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                      
                       
    December 31,   September 30,   June 30,   March 31,   December 31,  
  For the quarter ended   2016       2016       2016       2016       2015    
                       
Net income available to common stockholders $   983     $   483     $   354     $   321     $   22,043    
Basic income per average outstanding share   0.01       0.01       0.00       0.00       0.25    
Diluted income per average outstanding share   0.01       0.01       0.00       0.00       0.25    
Return on average assets   0.78 %     0.38 %     0.29 %     0.26 %     18.89 %  
Return on average equity   6.85 %     3.38 %     2.50 %     2.28 %     253.24 %  
Yield on interest earning assets   3.21 %     3.17 %     3.20 %     3.11 %     3.30 %  
Cost of interest-bearing liabilities   0.19 %     0.18 %     0.19 %     0.19 %     0.19 %  
Net interest spread   3.02 %     2.99 %     3.01 %     2.92 %     3.11 %  
Net interest margin   3.07 %     3.03 %     3.06 %     2.96 %     3.15 %  
Net charged-off loans $   54     $   (407 )   $   168     $   418     $   231    
Net charged-off loans to average loans (annualized)     0.08 %       (0.60 )%       0.26 %     0.70 %     0.40 %  
                       
                       
    December 31,   September 30,   June 30,   March 31,   December 31,  
      2016       2016       2016       2016       2015    
                       
Total stockholders' equity $   58,460     $   57,258     $   56,868     $   56,431     $   55,673    
Book value per common share $   0.65     $   0.65     $   0.65     $   0.64     $   0.64    
Common shares outstanding   90,345,174       87,604,088       87,604,088       87,604,088       87,604,088    
                       
                       
    December 31,   September 30,   June 30,   March 31,   December 31,  
      2016       2016         2016         2016         2015    
Nonperforming assets                      
Loans on nonaccrual status $   2,990     $   3,054     $   3,465     $   4,504     $   5,469    
Loans 90 days or more past due, still accruing   309       0       0       700       787    
Loan troubled debt restructurings   5,465       5,584       5,415       5,477       6,312    
  Total nonperforming loans   8,764       8,638       8,880       10,681       12,568    
Other real estate owned   10,236       10,958       11,418       13,100       12,579    
  Total nonperforming assets $   19,000     $   19,596     $   20,298     $   23,781     $   25,147    
                       
                       
Nonperforming assets excluding trouble debt restructurings   $   13,535     $   14,012     $   14,883     $   18,304     $   18,835    
Nonperforming loans to total assets   1.79 %     1.70 %     1.78 %     2.19 %     2.59 %  
Nonperforming assets to total assets   3.88 %     3.85 %     4.06 %     4.88 %     5.18 %  
Nonperforming assets excluding trouble debt restructurings to total assets     2.76 %     2.76 %     2.98 %     3.75 %     3.88 %  
Allowance for loan and lease losses to total loans   1.97 %     2.10 %     2.05 %     2.20 %     2.53 %  


NORTHERN STATES FINANCIAL CORPORATION                  
($000s, except per share data) (Unaudited)                    
Condensed Consolidated Balance Sheet   December 31,   September 30,   June 30,   March 31,   December 31,
      2016       2016       2016       2016       2015  
  Assets                    
Cash and due from banks $   4,552     $   5,491     $   4,965     $   5,539     $   5,834  
                     
Interest bearing deposits in financial institutions - maturities less than 90 days     41,179       61,013       66,743       53,004       55,380  
  Total cash and cash equivalents   45,731       66,504       71,708       58,543       61,214  
                     
Interest bearing deposits in financial institutions - maturities of 90 days or greater     29,233       33,880       31,049       31,377       33,786  
Securities available for sale   63,180       71,341       69,689       78,416       97,788  
Securities held to maturity   12,996       13,360       13,428       13,496       10,564  
Loans and leases, net of deferred fees   289,594       274,281       264,244       254,545       237,327  
Less: Allowance for loan and lease losses   (5,703 )     (5,757 )     (5,425 )     (5,593 )     (6,011 )
  Loans and leases, net   283,891       268,524       258,819       248,952       231,316  
Federal Home Loan Bank stock   931       931       931       931       931  
Office buildings and equipment, net   8,525       8,425       8,519       8,415       7,776  
Other real estate owned   10,236       10,958       11,418       13,100       12,579  
Accrued interest receivable   1,247       1,297       1,173       1,243       1,275  
Bank owned life insurance   10,597       10,520       10,439       10,358       5,054  
Deferred tax asset, net   22,436       21,461       21,479       22,112       21,869  
Other assets   985       1,252       1,112       746       1,195  
  Total assets $   489,988     $   508,453     $   499,764     $   487,689     $   485,347  
  Liabilities and Stockholders' Equity                    
Liabilities                    
Deposits                    
  Noninterest-bearing deposits $   100,870     $   99,245     $   102,097     $   96,829     $   93,913  
  Interest-bearing  deposits   289,940       314,834       307,334       301,926       301,509  
  Total deposits   390,810       414,079       409,431       398,755       395,422  
Securities sold under repurchase agreements   25,901       23,686       18,015       16,052       18,994  
Subordinated debentures   10,310       10,310       10,310       10,310       10,310  
Advances from borrowers for taxes and insurance   1,902       510       2,195       3,089       2,195  
Accrued interest payable and other liabilities   2,605       2,610       2,945       3,052       2,753  
  Total liabilities   431,528       451,195       442,896       431,258       429,674  
Stockholders' Equity                     
Common stock   906       878       878       878       878  
Deferred compensation   (1,260 )     0       0       0       0  
Additional paid-in capital   34,019       32,088       32,088       32,088       32,088  
Retained earnings   25,308       28,858       28,375       28,021       27,700  
Treasury stock, at cost   (182 )     (4,674 )     (4,674 )     (4,674 )     (4,674 )
Accumulated other comprehensive income (loss), net   (331 )     108       201       118       (319 )
  Total stockholders' equity   58,460       57,258       56,868       56,431       55,673  
  Total liabilities and stockholders' equity $   489,988     $   508,453     $   499,764     $   487,689     $   485,347  
                     
Common shares outstanding   90,345,174       87,604,088       87,604,088       87,604,088       87,604,088  
Book value per common share $   0.65     $   0.65     $   0.65     $   0.64     $   0.64  

 

NORTHERN STATES FINANCIAL CORPORATION                  
($000s, except per share data) (Unaudited)                    
                     
Condensed Consolidated Statement of Income                    
  For the quarter ended December 31,   September 30,   June 30,   March 31,   December 31,
      2016         2016         2016         2016         2015  
Interest income                     
Loans (including fee income) $   3,103     $   3,010     $   2,963     $   2,788     $   3,005  
Securities                    
  Taxable   353       378       377       420       491  
  Exempt from federal income tax   3       3       3       3       4  
Federal funds sold and other   145       163       130       144       97  
Total interest income   3,604       3,554       3,473       3,355       3,597  
Interest expense                    
Time deposits   61       67       68       74       79  
Other deposits   23       21       24       23       24  
Repurchase agreements and federal funds purchased     1       0       0       1       1  
Subordinated debentures   74       68       66       63       58  
Total interest expense   159       156       158       161       162  
Net interest income   3,445       3,398       3,315       3,194       3,435  
Provision for loan and lease losses   0       (75 )     0       0       (789 )
Net interest income after provision for loan and lease losses     3,445       3,473       3,315       3,194       4,224  
Noninterest income                    
Service fees on deposits   403       398       320       320       319  
Gain on sale of securities   0       0       104       117       0  
Net gain on sale of other assets   0       0       0       0       18  
Net gain (loss) on sale of other real estate owned   68       (7 )     126       13       22  
Bank owned life insurance income   78       80       82       53       40  
Other operating income   424       419       416       381       419  
Total noninterest income   973       890       1,048       884       818  
Noninterest expense                    
Salaries and employee benefits   2,593       1,787       1,861       1,822       1,940  
Occupancy and equipment, net   557       490       520       502       526  
Data processing   490       325       427       459       234  
Legal   72       28       81       19       52  
FDIC insurance   45       76       118       101       98  
Audit and other professional   169       125       151       168       151  
Printing and supplies expense   42       44       45       37       36  
Write-down of other real estate owned   55       487       126       0       1,282  
Other real estate owned expense   164       92       171       131       97  
Other operating expenses   326       297       309       305       303  
Total noninterest expense   4,513       3,751       3,809       3,544       4,719  
Net income before income taxes   (95 )     612       554       534       323  
Income tax expense   (1,078 )     129       200       213       (21,720 )
Net income   983       483       354       321       22,043  
                     
Average common shares outstanding     87,961,621         87,604,088         87,604,088         87,604,088         87,604,088  
Basic income per average outstanding share $   0.01     $   0.01     $   0.00     $   0.00     $   0.25  
Diluted income per average outstanding share $   0.01     $   0.01     $   0.00     $   0.00     $   0.25  

  

  NORTHERN STATES FINANCIAL CORPORATION        
  ($000s, except per share data) (Unaudited)          
             
  Condensed Consolidated Statement of Income          
    For the years ended December 31,   2016       2015    
             
  Interest income           
  Loans (including fee income) $   11,864     $   10,882    
  Securities          
    Taxable   1,528       2,227    
    Exempt from federal income tax   12       17    
  Federal funds sold and other   582       239    
  Total interest income   13,986       13,365    
  Interest expense          
  Time deposits   270       311    
  Other deposits   91       91    
  Repurchase agreements and federal funds purchased     2       2    
  Subordinated debentures   271       223    
  Total interest expense   634       627    
  Net interest income   13,352       12,738    
  Provision for loan and lease losses   (75 )     (689 )  
             
  Net interest income after provision for loan and lease losses     13,427       13,427    
  Noninterest income          
  Service fees on deposits   1,441       1,280    
  Gain on sale of securities   221       170    
  Net gain on sale of other assets   0       1,431    
  Net gain (loss) on sale of other real estate owned   200       231    
  Bank owned life insurance income   293       54    
  Other operating income   1,640       1,645    
  Total noninterest income   3,795       4,811    
  Noninterest expense          
  Salaries and employee benefits   8,063       7,079    
  Occupancy and equipment, net   2,069       2,211    
  Data processing   1,701       1,441    
  Legal   200       313    
  FDIC insurance   340       471    
  Audit and other professional   613       590    
  Printing and supplies expense   168       201    
  Write-down of other real estate owned   668       2,546    
  Other real estate owned expense   558       491    
  Other operating expenses   1,237       1,421    
  Total noninterest expense   15,617       16,764    
  Net income before income taxes   1,605       1,474    
  Income tax expense   (536 )     (21,655 )  
  Net income   2,141       23,129    
  Discount on redemption of preferred stock   0       0    
  Dividends to preferred stockholders   0       0    
  Accretion of discount on preferred stock   0       0    
  Net income (loss) available to common stockholders   $   2,141     $   23,129    
             
  Average common shares outstanding     87,693,960         87,604,088    
  Basic income per average outstanding share $   0.02     $   0.26    
  Diluted income per average outstanding share $   0.02     $   0.26    

 

NORTHERN STATES FINANCIAL CORPORATION                    
($000s, except per share data) (Unaudited)                      
                       
    December 31,   September 30,   June 30,   March 31,   December 31,  
      2016       2016       2016       2016       2015    
Loans                      
  Commercial $   28,179     $   14,977     $   12,556     $   11,883     $   12,144    
  Real estate-construction   26,975       22,255       17,531       15,369       21,609    
  Real estate-mortgage 1-4 family   48,593       47,826       49,530       41,499       28,449    
  Real estate-mortgage 5+ family   59,272       56,179       49,321       46,458       39,417    
  Real estate-mortgage commercial   115,514       121,491       123,717       129,042       125,978    
  Home equity   10,411       10,955       10,965       9,671       8,953    
  Installment   949       873       893       904       1,047    
  Deferred loan fees   (299 )     (275 )     (269 )     (281 )     (270 )  
  Total loans $   289,594     $   274,281     $   264,244     $   254,545     $   237,327    
                       
                       
    December 31,   September 30,   June 30,   March 31,   December 31,  
      2016       2016       2016       2016       2015    
Deposits                      
  Demand - noninterest bearing $   100,870     $   99,245     $   102,097     $   96,829     $   93,913    
  Demand - interest bearing   70,127       78,310       75,389       67,678       67,571    
  Money market accounts   48,231       56,921       54,297       52,032       51,797    
  Savings   90,095       88,578       88,813       88,826       84,515    
  Time, over $250,000   26,510       33,613       29,332       32,459       34,049    
  Time, $250,000 and under   54,977       57,412       59,503       60,931       63,327    
  Time, brokered   0       0       0       0       250    
  Total deposits $   390,810     $   414,079     $   409,431     $   398,755     $   395,422    

  

NORTHERN STATES FINANCIAL CORPORATION                          
($000s, except per share data) (Unaudited)                            
                               
  4Q 2016   3Q 2016   2Q 2016   1Q 2016   4Q 2015  
  Average Yield/   Average Yield/   Average Yield/   Average Yield/   Average Yield/  
  balance Rate   balance Rate   balance Rate   balance Rate   balance Rate  
Earning assets                              
  Loans $ 283,029 4.40 % $ 269,395 4.49 % $ 254,545 4.67 % $ 238,327 4.69 % $ 232,821 5.18 %
  Securities taxable   81,382 1.73     84,128 1.81     88,592 1.70     98,630 1.70     112,635 1.74  
  Securities tax-exempt   283 5.65     295 6.78     295 5.42     295 6.78     428 5.61  
  Interest-bearing deposits   86,056 0.67     96,358 0.68     92,069 0.56     95,565 0.60     91,402 0.42  
  Total earning assets   450,750 3.21 %   450,176 3.17 %   435,501 3.20 %   432,817 3.11 %   437,286 3.30 %
Non interest earning assets   53,461       53,823       55,761       51,891       29,467    
Total assets $ 504,211     $ 503,999     $ 491,262     $ 484,708     $ 466,753    
                               
Interest-bearing liabilities                              
  Interest-bearing demand deposits $   73,467 0.08 % $   75,295 0.06 % $   72,646 0.09 % $   67,804 0.08 % $   71,437 0.08 %
  Money market deposits   55,072 0.05     56,168 0.05     52,475 0.05     52,205 0.05     53,107 0.05  
  Savings deposits   89,400 0.01     89,082 0.01     89,415 0.01     86,031 0.01     83,536 0.01  
  Time deposits   86,655 0.28     91,003 0.29     89,727 0.30     96,323 0.31     98,661 0.32  
  Other borrowings   35,613 0.84     30,669 0.89     26,040 1.01     28,338 0.90     30,559 0.77  
  Total interest-bearing liabilities   340,207 0.19 %   342,217 0.18 %   330,303 0.19 %   330,701 0.19 %   337,300 0.19 %
Demand deposits   102,406       100,066       98,491       92,377       90,408    
Other liabilities   4,175       4,547       5,932       5,406       4,228    
Stockholders' equity   57,423       57,169       56,536       56,224       34,817    
Total liabilities and stockholders' equity $   504,211     $   503,999     $   491,262     $   484,708     $   466,753    
                               
Net interest spread 3.02 % 2.99 % 3.01 % 2.92 % 3.11 %
Net interest margin 3.07 % 3.03 % 3.06 % 2.96 % 3.15 %


For Additional Information, Contact:      
Scott Yelvington, President and Chief Executive Officer (847) 662-9828
Websites: www.nsfc.com    www.nsfc.net

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