Northern States Financial Corporation Reports First Quarter 2018 Earnings

Northern States Financial Corporation Reports First Quarter 2018 Earnings

WAUKEGAN, Ill., April 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 first quarter 2018 net income after tax of $866,000, an increase of $496,000, or 134.0%, compared to the first quarter 2017 net income after tax of $370,000. The Company’s per share book value at March 31, 2018 was $0.58.

Some highlights of continued financial improvement during the first quarter of 2018 included the following:   

  • Average loans increased by $19.7 million for the first quarter of 2018 compared with the first quarter of 2017.  Loan interest income increased $325 thousand for the first quarter of 2018 compared to the first quarter of 2017.  The increased loan interest income contributed to a net interest margin for the first quarter of 2018 of 3.45% compared to 3.21% for the first quarter of 2017.
     
  • 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 (“OREO”), decreased by $2.2 million from December 31, 2017 to March 31, 2018.  At March 31, 2018, the allowance for loan and lease losses to total loans and leases ratio was 2.17%.
     
  • First quarter 2018 noninterest income remained relatively stable, increasing $28 thousand compared to the first quarter of 2017.
     
  • First quarter 2018 noninterest expense decreased $264 thousand compared to the first quarter of 2017.  This decrease was primarily due from reductions to OREO expense of $275 thousand when comparing the first quarter of 2018 to the first quarter of 2017 as OREO balances were $1.9 million at March 31, 2018 compared to $10.2 million at March 31, 2017, a reduction of $8.3 million or 81.3%.
     
  • The Company focused on growing core deposits consisting of personal and business non-time deposits.  For the first quarter of 2018, average core deposits increased $10.1 million, or 3.7%, as compared with the first quarter of 2017.  Core deposits assist the Company in maintaining a low cost of funds during the first quarter of 2018 at 21 basis points, with the Bank’s cost of funds at 12 basis points.

“We are encouraged by our solid loan and core deposit growth and increases to earnings.  This will remain a focus along with our continued efforts to reduce expenses and NPAs,” stated Scott Yelvington, President and Chief Executive Officer.

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 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                  
                   
  March 31,   December 31,   September 30,   June 30,   March 31,
  For the quarter ended   2018       2017       2017       2017       2017  
                   
Net income (loss) available to common stockholders $   866     $   (6,266 )   $   963     $   (1,448 )   $   370  
Basic income (loss) per average outstanding share   0.01       (0.07 )     0.01       (0.02 )     0.00  
Diluted income (loss) per average outstanding share   0.01       (0.07 )     0.01       (0.02 )     0.00  
Return on average assets   0.71 %       (4.92 )%     0.78 %       (1.19 )%     0.30 %
Return on average equity   6.57 %       (42.46 )%     6.62 %       (9.77 )%     2.52 %
Yield on interest-earning assets   3.64 %     3.55 %     3.71 %     3.44 %     3.36 %
Cost of interest-bearing liabilities   0.29 %     0.26 %     0.24 %     0.21 %     0.20 %
Net interest spread   3.35 %     3.29 %     3.47 %     3.23 %     3.16 %
Net interest margin   3.45 %     3.37 %     3.54 %     3.29 %     3.21 %
Net charged-off (recovered) loans $   (76 )   $   (1 )   $   (1,172 )   $   (1 )   $   56  
Net charged-off loans to average loans (annualized)     (0.10 )%     0.00 %       (1.55 )%     0.00 %     0.08 %
                   
                   
  March 31,   December 31,   September 30,   June 30,   March 31,
    2018       2017       2017       2017       2017  
                   
Total stockholders’ equity $   53,138     $   52,474     $   58,859     $   57,795     $   59,047  
Book value per common share $   0.58     $   0.57     $   0.65     $   0.64     $   0.65  
Common shares outstanding   92,252,244       92,252,244       90,345,174       90,345,174       90,345,174  
                   
                   
  March 31,   December 31,   September 30,   June 30,   March 31,
    2018       2017         2017         2017         2017  
Nonperforming assets                  
Loans on nonaccrual status $   11,410     $   12,545     $   3,444     $   3,407     $   2,878  
Loans 90 days or more past due, still accruing   137       434       561       537       140  
Loan troubled debt restructurings   4,177       4,783       4,845       4,969       5,309  
  Total nonperforming loans   15,724       17,762       8,850       8,913       8,327  
Other real estate owned   1,898       2,039       2,217       6,935       10,174  
  Total nonperforming assets $   17,622     $   19,801     $   11,067     $   15,848     $   18,501  
                   
Nonperforming assets excluding trouble debt                  
  restructurings $   13,445     $   15,018     $   6,222     $   10,879     $   13,192  
Nonperforming loans to total assets   3.23 %     3.58 %     1.74 %     1.86 %     1.68 %
Nonperforming assets to total assets.   3.62 %     3.99 %     2.18 %     3.30 %     3.74 %
Nonperforming assets excluding trouble debt                  
  restructurings to total assets   2.76 %     3.03 %     1.22 %     2.27 %     2.67 %
Allowance for loan and lease losses to total loans   2.17 %     2.22 %     2.20 %     1.92 %     1.94 %
                                       

                     
NORTHERN STATES FINANCIAL CORPORATION                  
($000s, except per share data) (Unaudited)                    
Condensed Consolidated Balance Sheet   March 31,   December 31,   September 30,   June 30,   March 31,
      2018       2017       2017       2017       2017  
  Assets                    
Cash and due from banks. $   3,595     $   4,323     $   4,557     $   4,431     $   4,853  
Interest bearing deposits in financial institutions –                    
    maturities less than 90 days   45,850       59,062       61,682       37,956       47,132  
  Total cash and cash equivalents   49,445       63,385       66,239       42,387       51,985  
Interest bearing deposits in financial institutions –                    
    maturities of 90 days or greater   26,678       28,492       24,592       26,774       30,510  
Securities available for sale   47,999       50,570       53,190       56,272       59,640  
Securities held to maturity   12,643       12,714       12,786       12,856       12,926  
Loans and leases, net of deferred fees   317,376       307,448       310,209       294,901       290,801  
Less: Allowance for loan and lease losses   (6,897 )     (6,821 )     (6,820 )     (5,648 )     (5,647 )
  Loans and leases, net   310,479       300,627       303,389       289,253       285,154  
Federal Home Loan Bank stock   492       492       492       492       335  
Office buildings and equipment, net   8,417       8,443       8,419       8,630       8,674  
Other real estate owned   1,898       2,039       2,217       6,935       10,174  
Accrued interest receivable   1,358       1,224       1,358       1,165       1,255  
Bank owned life insurance   10,955       10,886       10,816       10,743       10,675  
Deferred tax asset, net   15,423       15,693       23,041       23,159       22,202  
Other assets   1,304       1,360       1,426       1,242       1,055  
  Total assets $   487,091     $   495,925     $   507,965     $   479,908     $   494,585  
    Liabilities and Stockholders’ Equity                    
Liabilities                    
Deposits                    
  Noninterest-bearing deposits $   120,113     $   115,619     $   112,821     $   107,470     $   106,096  
  Interest-bearing  deposits   272,182       283,027       296,462       277,249       290,899  
    Total deposits   392,295       398,646       409,283       384,719       396,995  
Securities sold under repurchase agreements   25,268       29,012       26,062       22,331       22,820  
Subordinated debentures   10,310       10,310       10,310       10,310       10,310  
Advances from borrowers for taxes and insurance   3,481       2,897       957       2,137       2,820  
Accrued interest payable and other liabilities   2,599       2,586       2,494       2,616       2,593  
    Total liabilities   433,953       443,451       449,106       422,113       435,538  
Stockholders’ Equity                    
Common stock   927       927       906       906       906  
Deferred compensation   (2,542 )     (2,542 )     (945 )     (1,050 )     (1,155 )
Additional paid-in capital   35,700       35,700       34,019       34,019       34,019  
Retained earnings   19,793       18,927       25,193       24,230       25,678  
Treasury stock, at cost.   (297 )     (297 )     (182 )     (182 )     (182 )
Accumulated other comprehensive income (loss), net   (443 )     (241 )     (132 )     (128 )     (219 )
  Total stockholders’ equity   53,138       52,474       58,859       57,795       59,047  
    Total liabilities and stockholders’ equity $   487,091     $   495,925     $   507,965     $   479,908     $   494,585  
                     
Common shares outstanding   92,252,244       92,252,244       90,345,174       90,345,174       90,345,174  
Book value per common share $   0.58     $   0.57     $   0.65     $   0.64     $   0.65  
                     

                     
NORTHERN STATES FINANCIAL CORPORATION                  
($000s, except per share data) (Unaudited)                    
                     
Condensed Consolidated Statement of Income   March 31,   December 31,   September 30,   June 30,   March 31,
  For the quarter ended  2018     2017         2017         2017         2017  
Interest income                    
  Loans (including fee income) $   3,473   $   3,496     $   3,566     $   3,195     $   3,148  
  Securities                    
  Taxable   339     312       333       334       357  
  Federal funds sold and other   273     314       223       177       160  
  Total interest income   4,085     4,122       4,122       3,706       3,665  
Interest expense                    
  Time deposits   98     99       74       54       61  
  Other deposits   26     27       26       26       25  
  Repurchase agreements and federal funds purchased   1     1       1       0       1  
  Subordinated debentures   98     90       87       82       76  
  Total interest expense   223     217       188       162       163  
Net interest income   3,862     3,905       3,934       3,544       3,502  
Provision for loan and lease losses   0     0       0       0       0  
Net interest income after provision for                    
  loan and lease losses.   3,862     3,905       3,934       3,544       3,502  
Noninterest income                    
  Service fees on deposits   378     387       373       384       380  
  Net gain on sale of other assets   0     0       68       0       0  
  Net gain (loss) on sale of other real estate owned   41     3       (51 )     (12 )     (4 )
  Bank owned life insurance income   69     70       72       69       78  
  Other operating income   389     397       352       436       395  
  Total noninterest income   877     857       814       877       849  
Noninterest expense                    
  Salaries and employee benefits   1,876     1,993       1,953       1,910       1,945  
  Occupancy and equipment, net   482     450       475       515       486  
  Data processing   416     427       488       466       456  
  Legal   76     29       54       62       23  
  FDIC insurance   70     30       60       60       30  
  Audit and other professional   244     236       150       231       181  
  Printing and supplies expense   40     54       32       38       51  
  Write-down of other real estate owned   0     194       0       3,109       0  
  Other real estate owned expense   55     (58 )     103       164       330  
  Other operating expenses   296     271       344       314       317  
  Total noninterest expense   3,555     3,626       3,659       6,869       3,819  
Net income before income taxes   1,184     1,136       1,089       (2,448 )     532  
Income tax expense   318     7,402       126       (1,000 )     162  
Net income $   866   $   (6,266 )   $   963     $   (1,448 )   $   370  
                     
Average common shares outstanding     92,252,244       91,886,314         90,345,174         90,345,174         90,345,174  
Basic income (loss) per average outstanding share $   0.01   $   (0.07 )   $   0.01     $   (0.02 )   $   0.00  
Diluted income (loss) per average outstanding share $   0.01   $   (0.07 )   $   0.01     $   (0.02 )   $   0.00  
                     
                     

                     
NORTHERN STATES FINANCIAL CORPORATION                  
($000s, except per share data) (Unaudited)                    
                     
    March 31,   December 31,   September 30,   June 30,   March 31,
      2018       2017       2017       2017       2017  
Loans                    
  Commercial $   26,152     $   26,493     $   26,530     $   26,355     $   27,462  
  Real estate-construction   38,163       38,661       37,843       30,866       26,534  
  Real estate-mortgage 1-4 family   47,716       49,717       47,760       48,658       50,533  
  Real estate-mortgage 5+ family   81,553       77,200       75,605       61,714       59,331  
  Real estate-mortgage commercial   113,485       105,488       112,803       118,271       118,917  
  Home equity   8,556       8,518       8,468       8,526       7,428  
  Installment   2,145       1,691       1,572       899       892  
  Deferred loan fees   (394 )     (320 )     (372 )     (388 )     (296 )
  Total loans $   317,376     $   307,448     $   310,209     $   294,901     $   290,801  
                     
                     
    March 31,   December 31,   September 30,   June 30,   March 31,
      2018       2017       2017       2017       2017  
Deposits                    
  Demand – noninterest bearing $   120,113     $   115,619     $   112,821     $   107,470     $   106,096  
  Demand – interest bearing   58,018       61,288       73,491       69,326       64,951  
  Money market accounts   49,486       53,347       54,060       49,709       50,161  
  Savings   91,704       89,876       92,363       92,735       91,861  
  Time, over $250,000   21,064       26,892       24,270       12,355       30,651  
  Time, $250,000 and under   51,910       51,624       52,278       53,124       53,275  
  Total deposits $   392,295     $   398,646     $   409,283     $   384,719     $   396,995  
                     
                     

                               
NORTHERN STATES FINANCIAL CORPORATION                          
($000s, except per share data) (Unaudited)                            
                               
  1Q 2018   4Q 2017   3Q 2017   2Q 2017   1Q 2017  
  Average Yield/   Average Yield/   Average Yield/   Average Yield/   Average Yield/  
  balance Rate   balance Rate   balance Rate   balance Rate   balance Rate  
Earning assets                              
  Loans $   308,736 4.51 % $   310,426 4.52 % $   302,266 4.73 % $   290,307 4.42 % $   289,085 4.37 %
  Securities taxable   62,757 2.14     65,082 1.91     68,286 1.95     71,543 1.86     75,361 1.88  
  Interest-bearing deposits   77,326 1.41     89,346 1.41     74,888 1.19     70,299 1.01     73,051 0.88  
  Total earning assets   448,819 3.64 %   464,854 3.55 %   445,440 3.71 %   432,149 3.44 %   437,497 3.36 %
Non interest earning assets   36,812       44,855       48,475       53,124       53,678    
Total assets $   485,631     $   509,709     $   493,915     $   485,273     $   491,175    
                               
Interest-bearing liabilities                              
  Interest-bearing demand deposits $   57,951 0.12 % $   70,097 0.10 % $   69,373 0.10 % $   67,112 0.10 % $   63,870 0.11 %
  Money market deposits   51,415 0.05     53,786 0.05     52,526 0.05     50,682 0.05     48,322 0.05  
  Savings deposits    90,747 0.01     91,382 0.01     92,396 0.01     92,360 0.01     90,626 0.01  
  Time deposits   74,133 0.53     77,171 0.51     73,153 0.40     70,898 0.30     85,014 0.29  
  Other borrowings   37,512 1.06     38,252 0.95     32,438 1.09     31,741 1.03     37,737 0.82  
  Total interest-bearing liabilities   311,758 0.29 %   330,688 0.26 %   319,886 0.24 %   312,793 0.21 %   325,569 0.20 %
Demand deposits   115,520       115,391       111,545       107,571       101,689    
Other liabilities   5,648       4,607       4,295       5,621       5,201    
Stockholders’ equity   52,705       59,023       58,189       59,288       58,716    
Total liabilities and stockholders’ equity $   485,631     $   509,709     $   493,915     $   485,273     $   491,175    
                               
Cost of funds (including demand deposits) 0.21 %   0.17 %   0.17 %   0.15 %   0.15 %
                               
Net interest spread 3.35 %   3.29 %   3.47 %   3.23 %   3.16 %
Net interest margin 3.45 %   3.37 %   3.54 %   3.29 %   3.21 %