WAUKEGAN, Ill., Oct. 13, 2017 (GLOBE NEWSWIRE) -- Northern States Financial Corporation (OTC PINK:NSFC) (the “Company”), the holding company of NorStates Bank (the “Bank”), today reported a third quarter 2017 earnings of $963,000 as compared with a loss of $1,448,000 for the second quarter of 2017 and earnings of $483,000 for the third quarter of 2016. Per share book value at September 30, 2017 was $0.65, compared to $0.64 at June 30, 2017.

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

• The Bank’s pretax earnings for the third quarter of 2017 were $1,201,000 as compared with $707,000 for the third quarter of 2016, an increase of 69.9%.
   
• 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 $4.8 million from June 30, 2017 to September 30, 2017.  The decrease to NPAs resulted from sales of other real estate owned (“OREO”).  It is expected that the costs for carrying the OREO will be substantially reduced in future quarters. NPAs less troubled debt restructurings to total assets decreased to 1.22% at September 30, 2017 from 2.27% at June 30, 2017.  
   
• At September 30, 2017, the allowance for loan and lease losses to total loans and leases ratio was 2.20%, increasing from 1.92% at June 30, 2017 as the Bank received a $1.2 million recovery during the third quarter of 2017.
   
• Loans increased by $15.3 million for the third quarter of 2017 compared with the second quarter of 2017.  Loan interest income increased $371 thousand for the third quarter of 2017 compared to the second quarter of 2017 which included $50,000 in loan prepayment penalties and additional loan fee income classified as interest resulting from the loan growth.  The increased loan interest income contributed to a net interest margin for the third quarter of 2017 of 3.54%.
   
• Core deposits consisting of personal and business non-time deposits increased $4.8 million from June 30, 2017.   Core deposits growth assisted the Company in having a low cost of funds, 17 basis points, during the third quarter of 2017. The Bank’s cost of funds for the third quarter was 10 basis points.
   
• Third quarter Illinois corporate income tax rates increased from 7.75% to 9.50% which resulted in a $269,000 increase in the deferred tax asset related to our Illinois net operating loss carry forward. This also resulted in a non-cash tax benefit during the third quarter.  This rate increase will have an impact on income tax expense in future quarters.             

“Q3 was an exceptionally good quarter for our Company,” stated Scott Yelvington, President and Chief Executive Officer of the Company, “as the reduction in NPA’s and the increase in loans had a very favorable impact on earnings. Additionally, we continue to emphasize growth in core deposits, reduction of expenses, and prudent deployment of 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.

For Additional Information, Contact:

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

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		2017				2017				2017				2016				2016
Net income available to common stockholders	$	963			$	(1,448	)		$	370			$	983			$	483
Basic income (loss) per average outstanding share		0.01				(0.02	)			0.00				0.01				0.01
Diluted income (loss) per average outstanding share		0.01				(0.02	)			0.00				0.01				0.01
Return on average assets		0.78	%			-1.19	%			0.30	%			0.78	%			0.38	%
Return on average equity		6.62	%			-9.77	%			2.52	%			6.85	%			3.38	%
Yield on interest-earning assets		3.71	%			3.44	%			3.36	%			3.21	%			3.17	%
Cost of interest-bearing liabilities		0.24	%			0.21	%			0.20	%			0.19	%			0.18	%
Net interest spread		3.47	%			3.23	%			3.16	%			3.02	%			2.99	%
Net interest margin		3.54	%			3.29	%			3.21	%			3.07	%			3.03	%
Net charged-off (recovered) loans	$	(1,172	)		$	(1	)		$	56			$	54			$	(407	)
Net charged-off loans to average loans (annualized)		-1.55	%			0.00	%			0.08	%			0.08	%			-0.60	%
	September 30,				June 30,				March 31,				December 31,				September 30,
		2017				2017				2017				2016				2016
Total stockholders' equity	$	58,859			$	57,795			$	59,047			$	58,460			$	57,258
Book value per common share	$	0.65			$	0.64			$	0.65			$	0.65			$	0.65
Common shares outstanding		90,345,174				90,345,174				90,345,174				90,345,174				87,604,088
	September 30,				June 30,				March 31,				December 31,				September 30,
		2017				2017				2017				2016				2016
Nonperforming assets
Loans on nonaccrual status	$	3,444			$	3,407			$	2,878			$	2,990			$	3,054
Loans 90 days or more past due, still accruing		561				537				140				309				0
Loan troubled debt restructurings		4,845				4,969				5,309				5,465				5,584
Total nonperforming loans		8,850				8,913				8,327				8,764				8,638
Other real estate owned		2,217				6,935				10,174				10,236				10,958
Total nonperforming assets	$	11,067			$	15,848			$	18,501			$	19,000			$	19,596
Nonperforming assets excluding trouble debt
restructurings	$	6,222			$	10,879			$	13,192			$	13,535			$	14,012
Nonperforming loans to total assets		1.74	%			1.86	%			1.68	%			1.79	%			1.70	%
Nonperforming assets to total assets		2.18	%			3.30	%			3.74	%			3.88	%			3.85	%
Nonperforming assets excluding trouble debt
restructurings to total assets		1.22	%			2.27	%			2.67	%			2.76	%			2.76	%
Allowance for loan and lease losses to total loans		2.20	%			1.92	%			1.94	%			1.97	%			2.10	%
NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
Condensed Consolidated Balance Sheet	September 30,				June 30,				March 31,				December 31,				September 30,
		2017				2017				2017				2016				2016
Assets
Cash and due from banks	$	4,557			$	4,431			$	4,853			$	4,552			$	5,491
Interest bearing deposits in financial institutions -
maturities less than 90 days		61,682				37,956				47,132				41,179				61,013
Total cash and cash equivalents		66,239				42,387				51,985				45,731				66,504
Interest bearing deposits in financial institutions -
maturities of 90 days or greater		24,592				26,774				30,510				29,233				33,880
Securities available for sale		53,190				56,272				59,640				63,180				71,341
Securities held to maturity		12,786				12,856				12,926				12,996				13,360
Loans and leases, net of deferred fees		310,209				294,901				290,801				289,594				274,281
Less: Allowance for loan and lease losses		(6,820	)			(5,648	)			(5,647	)			(5,703	)			(5,757	)
Loans and leases, net		303,389				289,253				285,154				283,891				268,524
Federal Home Loan Bank stock		492				492				335				931				931
Office buildings and equipment, net		8,419				8,630				8,674				8,525				8,425
Other real estate owned		2,217				6,935				10,174				10,236				10,958
Accrued interest receivable		1,358				1,165				1,255				1,247				1,297
Bank owned life insurance		10,816				10,743				10,675				10,597				10,520
Deferred tax asset, net		23,041				23,159				22,202				22,436				21,461
Other assets		1,426				1,242				1,055				985				1,252
Total assets	$	507,965			$	479,908			$	494,585			$	489,988			$	508,453
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing deposits	$	112,821			$	107,470			$	106,096			$	100,870			$	99,245
Interest-bearing  deposits		296,462				277,249				290,899				289,940				314,834
Total deposits		409,283				384,719				396,995				390,810				414,079
Securities sold under repurchase agreements		26,062				22,331				22,820				25,901				23,686
Subordinated debentures		10,310				10,310				10,310				10,310				10,310
Advances from borrowers for taxes and insurance		957				2,137				2,820				1,902				510
Accrued interest payable and other liabilities		2,494				2,616				2,593				2,605				2,610
Total liabilities		449,106				422,113				435,538				431,528				451,195
Stockholders' Equity
Common stock		906				906				906				906				878
Deferred compensation		(945	)			(1,050	)			(1,155	)			(1,260	)			0
Additional paid-in capital		34,019				34,019				34,019				34,019				32,088
Retained earnings		25,193				24,230				25,678				25,308				28,858
Treasury stock, at cost		(182	)			(182	)			(182	)			(182	)			(4,674	)
Accumulated other comprehensive income (loss), net		(132	)			(128	)			(219	)			(331	)			108
Total stockholders' equity		58,859				57,795				59,047				58,460				57,258
Total liabilities and stockholders' equity	$	507,965			$	479,908			$	494,585			$	489,988			$	508,453
Common shares outstanding		90,345,174				90,345,174				90,345,174				90,345,174				87,604,088
Book value per common share	$	0.65			$	0.64			$	0.65			$	0.65			$	0.65
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,
		2017				2017				2017				2016				2016
Interest income
Loans (including fee income)	$	3,566			$	3,195			$	3,148			$	3,103			$	3,010
Securities
Taxable		333				334				357				353				378
Exempt from federal income tax		0				0				0				3				3
Federal funds sold and other		223				177				160				145				163
Total interest income		4,122				3,706				3,665				3,604				3,554
Interest expense
Time deposits		74				54				61				61				67
Other deposits		26				26				25				23				21
Repurchase agreements and federal funds purchased		1				0				1				1				0
Subordinated debentures		87				82				76				74				68
Total interest expense		188				162				163				159				156
Net interest income		3,934				3,544				3,502				3,445				3,398
Provision for loan and lease losses		0				0				0				0				(75	)
Net interest income after provision for
loan and lease losses		3,934				3,544				3,502				3,445				3,473
Noninterest income
Service fees on deposits		373				384				380				403				398
Net gain on sale of other assets		68				0				0				0				0
Net gain (loss) on sale of other real estate owned		(51	)			(12	)			(4	)			68				(7	)
Bank owned life insurance income		72				69				78				78				80
Other operating income		352				436				395				424				419
Total noninterest income		814				877				849				973				890
Noninterest expense
Salaries and employee benefits		1,953				1,910				1,945				2,593				1,787
Occupancy and equipment, net		475				515				486				557				490
Data processing		488				466				456				490				325
Legal		54				62				23				72				28
FDIC insurance		60				60				30				45				76
Audit and other professional		150				231				181				169				125
Printing and supplies expense		32				38				51				42				44
Write-down of other real estate owned		0				3,109				0				55				487
Other real estate owned expense		103				164				330				164				92
Other operating expenses		344				314				317				326				297
Total noninterest expense		3,659				6,869				3,819				4,513				3,751
Net income before income taxes		1,089				(2,448	)			532				(95	)			612
Income tax expense		126				(1,000	)			162				(1,078	)			129
Net income	$	963			$	(1,448	)		$	370			$	983			$	483
Average common shares outstanding		90,345,174				90,345,174				90,345,174				87,961,621				87,604,088
Basic income per average outstanding share	$	0.01			$	(0.02	)		$	0.00			$	0.01			$	0.01
Diluted income per average outstanding share	$	0.01			$	(0.02	)		$	0.00			$	0.01			$	0.01
NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
	September 30,				June 30,				March 31,				December 31,				September 30,
		2017				2017				2017				2016				2016
Loans
Commercial	$	26,530			$	26,355			$	27,462			$	28,179			$	14,977
Real estate-construction		37,843				30,866				26,534				26,975				22,255
Real estate-mortgage 1-4 family		47,760				48,658				50,533				48,593				47,826
Real estate-mortgage 5+ family		75,605				61,714				59,331				59,272				56,179
Real estate-mortgage commercial		112,803				118,271				118,917				115,514				121,491
Home equity		8,468				8,526				7,428				10,411				10,955
Installment		1,572				899				892				949				873
Deferred loan fees		(372	)			(388	)			(296	)			(299	)			(275	)
Total loans	$	310,209			$	294,901			$	290,801			$	289,594			$	274,281
	September 30,				June 30,				March 31,				December 31,				September 30,
		2017				2017				2017				2016				2016
Deposits
Demand - noninterest bearing	$	112,821			$	107,470			$	106,096			$	100,870			$	99,245
Demand - interest bearing		73,491				69,326				64,951				70,127				78,310
Money market accounts		54,060				49,709				50,161				48,231				56,921
Savings		92,363				92,735				91,861				90,095				88,578
Time, over $250,000		24,470				12,355				30,651				26,510				33,613
Time, $250,000 and under		52,278				53,124				53,275				54,977				57,412
Total deposits	$	409,483			$	384,719			$	396,995			$	390,810			$	414,079

  

NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
	3Q 2017				2Q 2017				1Q 2017				4Q 2016				3Q 2016
	Average		Yield/		Average		Yield/		Average		Yield/		Average		Yield/		Average		Yield/
	balance		Rate		balance		Rate		balance		Rate		balance		Rate		balance		Rate
Earning assets
Loans	$	302,266	4.73	%	$	290,307	4.42	%	$	289,085	4.37	%	$	283,029	4.40	%	$	269,395	4.49	%
Securities taxable		68,286	1.95			71,543	1.86			75,361	1.88			81,382	1.73			84,128	1.81
Securities tax-exempt		0	0.00			0	0.00			0	0.00			283	5.65			295	6.78
Interest-bearing deposits		74,888	1.19			70,299	1.01			73,051	0.88			86,056	0.67			96,358	0.68
Total earning assets		445,440	3.71	%		432,149	3.44	%		437,497	3.36	%		450,750	3.21	%		450,176	3.17	%
Non interest earning assets		48,475				53,124				53,678				53,461				53,823
Total assets	$	493,915			$	485,273			$	491,175			$	504,211			$	503,999
Interest-bearing liabilities
Interest-bearing demand deposits	$	69,373	0.10	%	$	67,112	0.10	%	$	63,870	0.11	%	$	73,467	0.08	%	$	75,295	0.06	%
Money market deposits		52,526	0.05			50,682	0.05			48,322	0.05			55,072	0.05			56,168	0.05
Savings deposits		92,396	0.01			92,360	0.01			90,626	0.01			89,400	0.01			89,082	0.01
Time deposits		73,153	0.40			70,898	0.30			85,014	0.29			86,655	0.28			91,003	0.29
Other borrowings		32,438	1.09			31,741	1.03			37,737	0.82			35,613	0.84			30,669	0.89
Total interest-bearing liabilities		319,886	0.24	%		312,793	0.21	%		325,569	0.20	%		340,207	0.19	%		342,217	0.18	%
Demand deposits		111,545				107,571				101,689				102,406				100,066
Other liabilities		4,295				5,621				5,201				4,175				4,547
Stockholders' equity		58,189				59,288				58,716				57,423				57,169
Total liabilities and stockholders' equity	$	493,915			$	485,273			$	491,175			$	504,211			$	503,999
Cost of funds (including demand deposits)			0.17	%			0.15	%			0.15	%			0.14	%			0.14	%
Net interest spread			3.47	%			3.23	%			3.16	%			3.02	%			2.99	%
Net interest margin			3.54	%			3.29	%			3.21	%			3.07	%			3.03	%

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