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 endedDecember 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 
 AverageYield/ AverageYield/ AverageYield/ AverageYield/ AverageYield/ 
 balanceRate balanceRate balanceRate balanceRate balanceRate 
Earning assets               
  Loans$283,0294.40%$269,3954.49%$254,5454.67%$238,3274.69%$232,8215.18%
  Securities taxable 81,3821.73  84,1281.81  88,5921.70  98,6301.70  112,6351.74 
  Securities tax-exempt 2835.65  2956.78  2955.42  2956.78  4285.61 
  Interest-bearing deposits 86,0560.67  96,3580.68  92,0690.56  95,5650.60  91,4020.42 
  Total earning assets 450,7503.21% 450,1763.17% 435,5013.20% 432,8173.11% 437,2863.30%
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$  73,4670.08%$  75,2950.06%$  72,6460.09%$  67,8040.08%$  71,4370.08%
  Money market deposits 55,0720.05  56,1680.05  52,4750.05  52,2050.05  53,1070.05 
  Savings deposits 89,4000.01  89,0820.01  89,4150.01  86,0310.01  83,5360.01 
  Time deposits 86,6550.28  91,0030.29  89,7270.30  96,3230.31  98,6610.32 
  Other borrowings 35,6130.84  30,6690.89  26,0401.01  28,3380.90  30,5590.77 
  Total interest-bearing liabilities 340,2070.19% 342,2170.18% 330,3030.19% 330,7010.19% 337,3000.19%
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 spread3.02%2.99%3.01%2.92%3.11%
Net interest margin3.07%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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