WAUKEGAN, Ill., July 24, 2017 (GLOBE NEWSWIRE) -- Northern States Financial Corporation (OTC PINK:NSFC) (the “Company”), the holding company of NorStates Bank (the “Bank”), today reported a second quarter 2017 loss of $1,448,000 as compared with net income of $370,000 for the first quarter 2017. The second quarter 2017 loss was due to the Bank recognizing $3,109,000 in write-downs on properties which have been carried for several quarters as other real estate owned (“OREO”).  The effected properties are primarily under agreements to sell and the sales are expected to be completed in the third quarter. Generally Accepted Accounting Principles requires the Company to recognize these write-downs in the second quarter.  Per share book value at June 30, 2017 was $0.64, compared to $0.65 at March 31, 2017.

Scott Yelvington, President and Chief Executive Officer stated, “We were able to increase our net interest income and non-interest income, as well as loans, in the second quarter.  However, in an effort to substantially reduce non-performing assets ('NPAs'), we decided to enter into contracts on several OREO properties representing almost 75% of the $10 million OREO balance.  While the one-time write-downs are painful, we believe that the associated expense reduction and resulting effect on NPAs was appropriate at this time.  Unfortunately, by the accounting rules, we need to recognize the write-down loss this quarter.  The sales of these properties will reduce the OREO balance by $5.5 million in the third quarter of 2017 with no additional loss incurred.”  Yelvington continued, “Regrettably, the OREO loss obfuscated what was a steady increase in loans, core deposits and core earnings.”

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

  • 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 $3.2 million from December 31, 2016 to June 30, 2017.  NPAs less trouble debt restructurings to total assets decreased to 2.27% at June 30, 2017 from 2.76% at December 31, 2016.  At June 30, 2017, the allowance for loan and lease losses to total loans and leases ratio was 1.92%, down slightly from 1.94% at March 31, 2017.
     
  • Average loans increased by $35.8 million for the second quarter of 2017 compared with the second quarter of 2016.  Loan interest income increased $232 thousand for the second quarter of 2017 compared to the second quarter of 2016.  The increased loan interest income contributed to a net interest margin for the second quarter of 2017 of 3.29%.
     
  • Core deposits consisting of personal and business non-time deposits increased $7.6 million from December 31, 2016.   Core deposits growth assisted the Company in maintaining a low cost of funds during the second quarter of 2017 at 15 basis points with the Bank’s cost of funds at 8 basis points.
     
  • Excluding the OREO write-downs, the Company’s pretax income for the second quarter of 2017 was $661,000 as compared with pretax income of $532,000 for the first quarter of 2017, and the Bank’s pretax income for the second quarter of 2017 was $782,000 as compared with pretax income of $645,000 for the first quarter of 2017.

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          
           
  June 30, March 31, December 31, September 30, June 30,
  For the quarter ended 2017   2017   2016   2016   2016 
           
Net income available to common stockholders$  (1,448) $  370  $  983  $  483  $  354 
Basic income (loss) per average outstanding share (0.02)  0.00   0.01   0.01   0.00 
Diluted income (loss) per average outstanding share (0.02)  0.00   0.01   0.01   0.00 
Return on average assets   (1.19)%  0.30%  0.78%  0.38%  0.29%
Return on average equity   (9.77)%  2.52%  6.85%  3.38%  2.50%
Yield on interest-earning assets 3.44%  3.36%  3.21%  3.17%  3.20%
Cost of interest-bearing liabilities 0.21%  0.20%  0.19%  0.18%  0.19%
Net interest spread 3.23%  3.16%  3.02%  2.99%  3.01%
Net interest margin 3.29%  3.21%  3.07%  3.03%  3.06%
Net charged-off (recovered) loans$  (1) $  56  $  54  $  (407) $  168 
Net charged-off loans to average loans (annualized) 0.00%  0.08%  0.08%    (0.60)%  0.26%
           
           
  June 30, March 31, December 31, September 30, June 30,
   2017   2017   2016   2016   2016 
           
Total stockholders' equity$  57,795  $  59,047  $  58,460  $  57,258  $  56,868 
Book value per common share$  0.64  $  0.65  $  0.65  $  0.65  $  0.65 
Common shares outstanding 90,345,174   90,345,174   90,345,174   87,604,088   87,604,088 
           
           
  June 30, March 31, December 31, September 30, June 30,
     2017     2017   2016   2016     2016 
Nonperforming assets          
Loans on nonaccrual status$  3,407  $  2,878  $  2,990  $  3,054  $  3,465 
Loans 90 days or more past due, still accruing 537   140   309   0   0 
Loan troubled debt restructurings 4,969   5,309   5,465   5,584   5,415 
  Total nonperforming loans 8,913   8,327   8,764   8,638   8,880 
Other real estate owned 6,935   10,174   10,236   10,958   11,418 
  Total nonperforming assets$  15,848  $  18,501  $  19,000  $  19,596  $  20,298 
           
Nonperforming assets excluding trouble debt          
  restructurings$  10,879  $  13,192  $  13,535  $  14,012  $  14,883 
Nonperforming loans to total assets 1.86%  1.68%  1.79%  1.70%  1.78%
Nonperforming assets to total assets 3.30%  3.74%  3.88%  3.85%  4.06%
Nonperforming assets excluding trouble debt          
  restructurings to total assets 2.27%  2.67%  2.76%  2.76%  2.98%
Allowance for loan and lease losses to total loans 1.92%  1.94%  1.97%  2.10%  2.05%


            
NORTHERN STATES FINANCIAL CORPORATION          
($000s, except per share data) (Unaudited)           
Condensed Consolidated Balance Sheet June 30, March 31, December 31, September 30, June 30, 
   2017   2017   2016   2016   2016  
  Assets           
Cash and due from banks$  4,431  $  4,853  $  4,552  $  5,491  $  4,965  
Interest bearing deposits in financial institutions -           
  maturities less than 90 days 37,956   47,132   41,179   61,013   66,743  
  Total cash and cash equivalents 42,387   51,985   45,731   66,504   71,708  
Interest bearing deposits in financial institutions -           
  maturities of 90 days or greater 26,774   30,510   29,233   33,880   31,049  
Securities available for sale 56,272   59,640   63,180   71,341   69,689  
Securities held to maturity 12,856   12,926   12,996   13,360   13,428  
Loans and leases, net of deferred fees 294,901   290,801   289,594   274,281   264,244  
Less: Allowance for loan and lease losses (5,648)  (5,647)  (5,703)  (5,757)  (5,425) 
  Loans and leases, net 289,253   285,154   283,891   268,524   258,819  
Federal Home Loan Bank stock 492   335   931   931   931  
Office buildings and equipment, net 8,630   8,674   8,525   8,425   8,519  
Other real estate owned 6,935   10,174   10,236   10,958   11,418  
Accrued interest receivable 1,165   1,255   1,247   1,297   1,173  
Bank owned life insurance 10,743   10,675   10,597   10,520   10,439  
Deferred tax asset, net 23,159   22,202   22,436   21,461   21,479  
Other assets 1,242   1,055   985   1,252   1,112  
  Total assets$  479,908  $  494,585  $  489,988  $  508,453  $  499,764  
  Liabilities and Stockholders' Equity           
Liabilities           
Deposits           
  Noninterest-bearing deposits$  107,470  $  106,096  $  100,870  $  99,245  $  102,097  
  Interest-bearing  deposits 277,249   290,899   289,940   314,834   307,334  
  Total deposits 384,719   396,995   390,810   414,079   409,431  
Securities sold under repurchase agreements 22,331   22,820   25,901   23,686   18,015  
Subordinated debentures 10,310   10,310   10,310   10,310   10,310  
Advances from borrowers for taxes and insurance 2,137   2,820   1,902   510   2,195  
Accrued interest payable and other liabilities 2,616   2,593   2,605   2,610   2,945  
  Total liabilities 422,113   435,538   431,528   451,195   442,896  
Stockholders' Equity           
Common stock 906   906   906   878   878  
Deferred compensation (1,050)  (1,155)  (1,260)  0   0  
Additional paid-in capital 34,019   34,019   34,019   32,088   32,088  
Retained earnings 24,230   25,678   25,308   28,858   28,375  
Treasury stock, at cost (182)  (182)  (182)  (4,674)  (4,674) 
Accumulated other comprehensive income (loss), net (128)  (219)  (331)  108   201  
  Total stockholders' equity 57,795   59,047   58,460   57,258   56,868  
  Total liabilities and stockholders' equity$  479,908  $  494,585  $  489,988  $  508,453  $  499,764  
            
Common shares outstanding 90,345,174   90,345,174   90,345,174   87,604,088   87,604,088  
Book value per common share$  0.64  $  0.65  $  0.65  $  0.65  $  0.65  
            


NORTHERN STATES FINANCIAL CORPORATION          
($000s, except per share data) (Unaudited)           
            
Condensed Consolidated Statement of Income           
  For the quarter endedJune 30, March 31, December 31, September 30, June 30, 
     2017     2017   2016     2016     2016 
Interest income           
  Loans (including fee income)$  3,195  $  3,148  $  3,103  $  3,010  $  2,963 
  Securities           
  Taxable 334   357   353   378   377 
  Exempt from federal income tax 0   0   3   3   3 
  Federal funds sold and other 177   160   145   163   130 
  Total interest income 3,706   3,665   3,604   3,554   3,473 
Interest expense           
  Time deposits 54   61   61   67   68 
  Other deposits 26   25   23   21   24 
  Repurchase agreements and federal funds purchased 0   1   1   0   0 
  Subordinated debentures 82   76   74   68   66 
  Total interest expense 162   163   159   156   158 
Net interest income 3,544   3,502   3,445   3,398   3,315 
Provision for loan and lease losses 0   0   0   (75)  0 
Net interest income after provision for           
  loan and lease losses 3,544   3,502   3,445   3,473   3,315 
Noninterest income           
  Service fees on deposits 384   380   403   398   320 
  Gain on sale of securities 0   0   0   0   104 
  Net gain (loss) on sale of other real estate owned (12)  (4)  68   (7)  126 
  Bank owned life insurance income 69   78   78   80   82 
  Other operating income 436   395   424   419   416 
  Total noninterest income 877   849   973   890   1,048 
Noninterest expense           
  Salaries and employee benefits 1,910   1,945   2,593   1,787   1,861 
  Occupancy and equipment, net 515   486   557   490   520 
  Data processing 466   456   490   325   427 
  Legal 62   23   72   28   81 
  FDIC insurance 60   30   45   76   118 
  Audit and other professional 231   181   169   125   151 
  Printing and supplies expense 38   51   42   44   45 
  Write-down of other real estate owned 3,109   0   55   487   126 
  Other real estate owned expense 164   330   164   92   171 
  Other operating expenses 314   317   326   297   309 
  Total noninterest expense 6,869   3,819   4,513   3,751   3,809 
Net income before income taxes (2,448)  532   (95)  612   554 
Income tax expense (1,000)  162   (1,078)  129   200 
Net income$  (1,448) $  370  $  983  $   483  $  354 
            
Average common shares outstanding   90,345,174     90,345,174     87,961,621     87,604,088     87,604,088 
Basic income per average outstanding share$  (0.02) $  0.00  $  0.01  $  0.01  $  0.00 
Diluted income per average outstanding share$  (0.02) $  0.00  $  0.01  $  0.01  $  0.00 
            


NORTHERN STATES FINANCIAL CORPORATION          
($000s, except per share data) (Unaudited)           
            
  June 30, March 31, December 31, September 30, June 30, 
   2017   2017   2016   2016   2016  
Loans           
  Commercial$  26,355  $  27,462  $  28,179  $  14,977  $  12,556  
  Real estate-construction 30,866   26,534   26,975   22,255   17,531  
  Real estate-mortgage 1-4 family 48,658   50,533   48,593   47,826   49,530  
  Real estate-mortgage 5+ family 61,714   59,331   59,272   56,179   49,321  
  Real estate-mortgage commercial 118,271   118,917   115,514   121,491   123,717  
  Home equity 8,526   7,428   10,411   10,955   10,965  
  Installment 899   892   949   873   893  
  Deferred loan fees (388)  (296)  (299)  (275)  (269) 
  Total loans$  294,901  $  290,801  $  289,594  $  274,281  $  264,244  
            
            
  June 30, March 31, December 31, September 30, June 30, 
   2017   2017   2016   2016   2016  
Deposits           
  Demand - noninterest bearing$  107,470  $  106,096  $  100,870  $  99,245  $  102,097  
  Demand - interest bearing 69,326   64,951   70,127   78,310   75,389  
  Money market accounts 49,709   50,161   48,231   56,921   54,297  
  Savings 92,735   91,861   90,095   88,578   88,813  
  Time, over $250,000 12,355   30,651   26,510   33,613   29,332  
  Time, $250,000 and under 53,124   53,275   54,977   57,412   59,503  
  Time, brokered 0   0   0   0   0  
  Total deposits$  384,719  $  396,995  $  390,810  $  414,079  $  409,431  
            


NORTHERN STATES FINANCIAL CORPORATION                 
($000s, except per share data) (Unaudited)                   
                     
 2Q 2017 1Q 2017 4Q 2016 3Q 2016 2Q 2016 
 Average Yield/ Average Yield/ Average Yield/ Average Yield/ Average Yield/ 
 balance Rate balance Rate balance Rate balance Rate balance Rate 
Earning assets                    
  Loans$  290,307 4.42% $  289,085 4.37% $  283,029 4.40% $  269,395 4.49% $  254,545 4.67%
  Securities taxable 71,543 1.86   75,361 1.88   81,382 1.73   84,128 1.81   88,592 1.70 
  Securities tax-exempt 0 0.00   0 0.00   283 5.65   295 6.78   295 5.42 
  Interest-bearing deposits 70,299 1.01   73,051 0.88   86,056 0.67   96,358 0.68   92,069 0.56 
  Total earning assets 432,149 3.44%  437,497 3.36%  450,750 3.21%  450,176 3.17%  435,501 3.20%
Non interest earning assets 53,124     53,678     53,461     53,823     55,761   
Total assets$  485,273    $  491,175    $  504,211    $  503,999    $  491,262   
                     
Interest-bearing liabilities                    
  Interest-bearing demand deposits$  67,112 0.10% $  63,870 0.11% $  73,467 0.08% $  75,295 0.06% $  72,646 0.09%
  Money market deposits 50,682 0.05   48,322 0.05   55,072 0.05   56,168 0.05   52,475 0.05 
  Savings deposits 92,360 0.01   90,626 0.01   89,400 0.01   89,082 0.01   89,415 0.01 
  Time deposits 70,898 0.30   85,014 0.29   86,655 0.28   91,003 0.29   89,727 0.30 
  Other borrowings 31,741 1.03   37,737 0.82   35,613 0.84   30,669 0.89   26,040 1.01 
  Total interest-bearing liabilities. 312,793 0.21%  325,569 0.20%  340,207 0.19%  342,217 0.18%  330,303 0.19%
Demand deposits 107,571     101,689     102,406     100,066     98,491   
Other liabilities 5,621     5,201     4,175     4,547     5,932   
Stockholders' equity 59,288     58,716     57,423     57,169     56,536   
Total liabilities and stockholders' equity$  485,273    $  491,175    $  504,211    $  503,999    $  491,262   
                     
Cost of funds (including demand deposits) 0.15%  0.15%  0.14%  0.14%  0.15%
                     
Net interest spread 3.23%  3.16%  3.02%  2.99%  3.01%
Net interest margin 3.29%  3.21%  3.07%  3.03%  3.06%
                     


For Additional Information, Contact:

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

Primary Logo