Northern States Financial Corporation Reports 2016 Net

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	%

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

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