WAUKEGAN, Ill., July 18, 2018 (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 second quarter 2018 net income after tax of $410,000, a decrease of $456,000 compared to the first quarter 2018 net income after tax of $866,000.  Second quarter 2018 net income was negatively impacted by costs related to the impending merger with First Midwest Bancorp, Inc., which was announced on June 7, 2018.  The Company’s per share book value at June 30, 2018 was $0.58.

Some highlights during the second quarter of 2018 included the following:

  • Average loans increased by $20.5 million for the second quarter of 2018 compared with the second quarter of 2017.  Loan interest income increased $406,000 for the second quarter of 2018 compared to the second quarter of 2017.  The increased loan interest income contributed to a net interest margin for the second quarter of 2018 of 3.44% compared to 3.29% for the second quarter of 2017.

  • Non-performing assets, consisting of nonaccrual loans, ninety days or more past due loans still accruing interest, loans considered troubled debt restructurings and other real estate owned (“OREO”), decreased by $6.9 million from December 31, 2017 to June 30, 2018.  At June 30, 2018, the allowance for loan and lease losses to total loans and leases ratio was 2.05%.

  • Second quarter 2018 noninterest income was impacted by a loss on the sale of OREO of $558,000.  Without this loss, noninterest income would have been $851,000, a decrease of $26,000 compared to the first quarter of 2018.

  • Noninterest expense increased $179,000 during the second quarter of 2018 compared to the first quarter of 2018.  Combined legal fees and audit and other professional fees increased $159,000 during the second quarter 2018 compared to the first quarter of 2018 in part due to expenses related to the impending merger with First Midwest Bancorp, Inc. 

  • The Company focused on growing deposits which, as of June 30, 2018, increased $59.0 million, or 15.4%, as compared with June 30, 2017.  Low cost demand - noninterest bearing deposits and demand – interest bearing deposits increased $16.4 million and $20.8 million, respectively, at June 30, 2018 as compared with June 30, 2017.  Low cost deposits assisted the Company in maintaining a low cost of funds during the second quarter of 2018 at 29 basis points, with the Bank’s cost of funds at 19 basis points.

“Until the merger with First Midwest Bancorp, Inc. closes, deposit growth and reducing non-performing assets will remain a focus along with our continued efforts to reduce expenses and increase profitability,” stated Scott Yelvington, President and Chief Executive Officer.

About Northern States Financial Corporation

Northern States Financial Corporation is the holding company for NorStates Bank. NorStates Bank maintains its principal executive offices in Waukegan, Illinois. NorStates Bank is a client-focused bank committed to providing quality financial services with a personal touch through a complete line of loan, deposit and cash management services. It provides these financial services through eight banking locations in Lake County, Illinois. NorStates Bank’s website is www.norstatesbank.com.

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, the risk that the merger may not be completed or may not be completed in a timely manner, 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 2018
 2018
 2017
 2017
 2017
           
Net income (loss) available to common stockholders $410  $866  $(6,266) $963  $(1,448)
Basic income (loss) per average outstanding share  0.00   0.01   (0.07)  0.01   (0.02)
Diluted income (loss) per average outstanding share  0.00   0.01   (0.07)  0.01   (0.02)
Return on average assets  0.33%  0.71%  -4.92%  0.78%  -1.19%
Return on average equity  3.06%  6.57%  -42.46%  6.62%  -9.77%
Yield on interest-earning assets  3.71%  3.64%  3.55%  3.71%  3.44%
Cost of interest-bearing liabilities  0.40%  0.29%  0.26%  0.24%  0.21%
Net interest spread  3.31%  3.35%  3.29%  3.47%  3.23%
Net interest margin  3.44%  3.45%  3.37%  3.54%  3.29%
Net charged-off (recovered) loans $531  $(76) $(1) $(1,172) $(1)
Net charged-off loans to average loans (annualized)  0.68%  (0.10)% 0.00%  (1.55)% 0.00%
           
           
  June 30, March 31, December 31, September 30, June 30,
  2018
 2018
 2017
 2017
 2017
           
Total stockholders' equity $53,501  $53,138  $52,474  $58,859  $57,795 
Book value per common share $0.58  $0.58  $0.57  $0.65  $0.64 
Common shares outstanding  92,302,244   92,252,244   92,252,244   90,345,174   90,345,174 
           
           
  June 30, March 31, December 31, September 30, June 30,
  2018
 2018
 2017
 2017
 2017
Nonperforming assets          
Loans on nonaccrual status $11,180  $11,410  $12,545  $3,444  $3,407 
Loans 90 days or more past due, still accruing  260   137   434   561   537 
Loan troubled debt restructurings  554   4,177   4,783   4,845   4,969 
Total nonperforming loans  11,994   15,724   17,762   8,850   8,913 
Other real estate owned  942   1,898   2,039   2,217   6,935 
Total nonperforming assets $12,936  $17,622  $19,801  $11,067  $15,848 
           
Nonperforming assets excluding trouble debt          
restructurings $12,832  $13,445  $15,018  $6,222  $10,879 
Nonperforming loans to total assets  2.26%  3.23%  3.58%  1.74%  1.86%
Nonperforming assets to total assets  2.44%  3.62%  3.99%  2.18%  3.30%
Nonperforming assets excluding trouble debt          
restructurings to total assets  2.33%  2.76%  3.03%  1.22%  2.27%
Allowance for loan and lease losses to total loans  2.05%  2.17%  2.22%  2.20%  1.92%
           
           
NORTHERN STATES FINANCIAL CORPORATION          
($000s, except per share data) (Unaudited)          
Condensed Consolidated Balance Sheet June 30, March 31, December 31, September 30, June 30,
  2018
 2018
 2017
 2017
 2017
Assets          
Cash and due from banks $4,023  $3,595  $4,323  $4,557  $4,431 
Interest bearing deposits in financial institutions -          
maturities less than 90 days  112,963   45,850   59,062   61,682   37,956 
Total cash and cash equivalents  116,986   49,445   63,385   66,239   42,387 
Interest bearing deposits in financial institutions -          
maturities of 90 days or greater  18,096   26,678   28,492   24,592   26,774 
Securities available for sale  41,940   47,999   50,570   53,190   56,272 
Securities held to maturity  10,589   12,643   12,714   12,786   12,856 
Loans and leases, net of deferred fees  310,453   317,376   307,448   310,209   294,901 
Less: Allowance for loan and lease losses  (6,366)  (6,897)  (6,821)  (6,820)  (5,648)
Loans and leases, net  304,087   310,479   300,627   303,389   289,253 
Federal Home Loan Bank stock  554   492   492   492   492 
Office buildings and equipment, net  8,298   8,417   8,443   8,419   8,630 
Other real estate owned  942   1,898   2,039   2,217   6,935 
Accrued interest receivable  1,174   1,358   1,224   1,358   1,165 
Bank owned life insurance  11,024   10,955   10,886   10,816   10,743 
Deferred tax asset, net  15,306   15,423   15,693   23,041   23,159 
Other assets  1,285   1,304   1,360   1,426   1,242 
Total assets $530,281  $487,091  $495,925  $507,965  $479,908 
Liabilities and Stockholders' Equity          
Liabilities          
Deposits          
Noninterest-bearing deposits $123,827  $120,113  $115,619  $112,821  $107,470 
Interest-bearing deposits  319,979   272,182   283,027   296,462   277,249 
Total deposits  443,806   392,295   398,646   409,283   384,719 
Securities sold under repurchase agreements  17,458   25,268   29,012   26,062   22,331 
Subordinated debentures  10,310   10,310   10,310   10,310   10,310 
Advances from borrowers for taxes and insurance  2,344   3,481   2,897   957   2,137 
Accrued interest payable and other liabilities  2,862   2,599   2,586   2,494   2,616 
Total liabilities  476,780   433,953   443,451   449,106   422,113 
Stockholders' Equity          
Common stock  927   927   927   906   906 
Deferred compensation  (2,580)  (2,542)  (2,542)  (945)  (1,050)
Additional paid-in capital  35,738   35,700   35,700   34,019   34,019 
Retained earnings  20,203   19,793   18,927   25,193   24,230 
Treasury stock, at cost  (297)  (297)  (297)  (182)  (182)
Accumulated other comprehensive income (loss), net  (490)  (443)  (241)  (132)  (128)
Total stockholders' equity  53,501   53,138   52,474   58,859   57,795 
Total liabilities and stockholders' equity $530,281  $487,091  $495,925  $507,965  $479,908 
           
Common shares outstanding  92,302,244   92,252,244   92,252,244   90,345,174   90,345,174 
Book value per common share $0.58  $0.58  $0.57  $0.65  $0.64 
           
           
NORTHERN STATES FINANCIAL CORPORATION          
($000s, except per share data) (Unaudited)          
           
Condensed Consolidated Statement of Income          
For the quarter ended June 30, March 31, December 31, September 30, June 30,
  2018
 2018
 2017
 2017
 2017
Interest income          
Loans (including fee income) $3,601  $3,473  $3,496  $3,566  $3,195 
Securities          
Taxable  319   339   312   333   334 
Federal funds sold and other  387   273   314   223   177 
Total interest income  4,307   4,085   4,122   4,122   3,706 
Interest expense          
Time deposits  167   98   99   74   54 
Other deposits  29   26   27   26   26 
Repurchase agreements and federal funds purchased  9   1   1   1   0 
Subordinated debentures  114   98   90   87   82 
Total interest expense  319   223   217   188   162 
Net interest income  3,988   3,862   3,905   3,934   3,544 
Provision for loan and lease losses  0   0   0   0   0 
Net interest income after provision for          
loan and lease losses  3,988   3,862   3,905   3,934   3,544 
Noninterest income          
Service fees on deposits  359   378   387   373   384 
Net gain on sale of other assets  0   0   0   68   0 
Net gain (loss) on sale of other real estate owned  (558)  41   3   (51)  (12)
Bank owned life insurance income  69   69   70   72   69 
Other operating income  423   389   397   352   436 
Total noninterest income  293   877   857   814   877 
Noninterest expense          
Salaries and employee benefits  1,839   1,876   1,993   1,953   1,910 
Occupancy and equipment, net  442   482   450   475   515 
Data processing  434   416   427   488   466 
Legal  144   76   29   54   62 
FDIC insurance  90   70   30   60   60 
Audit and other professional  335   244   236   150   231 
Printing and supplies expense  32   40   54   32   38 
Write-down of other real estate owned  55   0   194   0   3,109 
Other real estate owned expense  12   55   (58)  103   164 
Other operating expenses.  351   296   271   344   314 
Total noninterest expense  3,734   3,555   3,626   3,659   6,869 
Net income before income taxes  547   1,184   1,136   1,089   (2,448)
Income tax expense  137   318   7,402   126   (1,000)
Net income $410  $866  $(6,266) $963  $(1,448)
           
Average common shares outstanding  92,286,859   92,252,244   91,886,314   90,345,174   90,345,174 
Basic income per average outstanding share $0.00  $0.01  $(0.07) $0.01  $(0.02)
Diluted income per average outstanding share $0.00  $0.01  $(0.07) $0.01  $(0.02)
           
           
NORTHERN STATES FINANCIAL CORPORATION          
($000s, except per share data) (Unaudited)          
           
  June 30, March 31, December 31, September 30, June 30,
  2018
 2018
 2017
 2017
 2017
Loans          
Commercial $26,786  $26,152  $26,493  $26,530  $26,355 
Real estate-construction  35,198   38,163   38,661   37,843   30,866 
Real estate-mortgage 1-4 family  48,637   47,716   49,717   47,760   48,658 
Real estate-mortgage 5+ family  80,569   81,553   77,200   75,605   61,714 
Real estate-mortgage commercial  108,871   113,485   105,488   112,803   118,271 
Home equity  8,578   8,556   8,518   8,468   8,526 
Installment  2,166   2,145   1,691   1,572   899 
Deferred loan fees  (352)  (394)  (320)  (372)  (388)
Total loans $310,453  $317,376  $307,448  $310,209  $294,901 
           
           
  June 30, March 31, December 31, September 30, June 30,
  2018
 2018
 2017
 2017
 2017
Deposits          
Demand - noninterest bearing $123,827  $120,113  $115,619  $112,821  $107,470 
Demand - interest bearing  90,133   58,018   61,288   73,491   69,326 
Money market accounts  56,111   49,486   53,347   54,060   49,709 
Savings  88,872   91,704   89,876   92,363   92,735 
Time, over $250,000  31,565   21,064   26,892   24,270   12,355 
Time, $250,000 and under  53,298   51,910   51,624   52,278   53,124 
Total deposits $443,806  $392,295  $398,646  $409,283  $384,719 
           

 

                    
NORTHERN STATES FINANCIAL CORPORATION                 
($000s, except per share data) (Unaudited)                  
                    
 2Q 2018  1Q 2018  4Q 2017  3Q 2017  2Q 2017 
 AverageYield/  AverageYield/  AverageYield/  AverageYield/  AverageYield/ 
 balanceRate  balanceRate  balanceRate  balanceRate  balanceRate 
Earning assets                   
Loans$310,7824.65% $308,7364.51% $310,4264.52% $302,2664.73% $290,3074.42%
Securities taxable 56,3372.24   62,7572.14   65,0821.91   68,2861.95   71,5431.86 
Interest-bearing deposits 97,1421.59   77,3261.41   89,3461.41   74,8881.19   70,2991.01 
Total earning assets 464,2613.71%  448,8193.64%  464,8543.55%  445,4403.71%  432,1493.44%
Non interest earning assets 36,008    36,812    44,855    48,475    53,124  
Total assets$500,269   $485,631   $509,709   $493,915   $485,273  
                    
Interest-bearing liabilities                   
Interest-bearing demand deposits$63,2570.10% $57,9510.12% $70,0970.10% $69,3730.10% $67,1120.10%
Money market deposits 54,2430.07   51,4150.05   53,7860.05   52,5260.05   50,6820.05 
Savings deposits 90,6970.01   90,7470.01   91,3820.01   92,3960.01   92,3600.01 
Time deposits 78,8390.85   74,1330.53   77,1710.51   73,1530.40   70,8980.30 
Other borrowings 30,7041.60   37,5121.06   38,2520.95   32,4381.09   31,7411.03 
Total interest-bearing liabilities 317,7400.40%  311,7580.29%  330,6880.26%  319,8860.24%  312,7930.21%
Demand deposits 123,256    115,520    115,391    111,545    107,571  
Other liabilities 5,696    5,648    4,607    4,295    5,621  
Stockholders' equity 53,577    52,705    59,023    58,189    59,288  
Total liabilities and stockholders' equity$500,269   $485,631   $509,709   $493,915   $485,273  
                    
Cost of funds (including demand deposits)0.29%  0.21%  0.17%  0.17%  0.15%
                    
Net interest spread3.31%  3.35%  3.29%  3.47%  3.23%
Net interest margin3.44%  3.45%  3.37%  3.54%  3.29%
                    

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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