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NORTHERN STATES FI
Symbol	NSFC
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Northern States Financial Corporation Reports Second Quarter 2016 Earnings

2016-07-26 18:03 ET - News Release

WAUKEGAN, Ill., July 26, 2016 (GLOBE NEWSWIRE) -- Northern States Financial Corporation (OTC PINK:NSFC) (the “Company”), the holding company of NorStates Bank (the “Bank”), an FDIC insured financial institution, today reported second quarter 2016 net income of $354,000 as compared with $321,000 for the first quarter 2016. Per share book value at June 30, 2016 was $0.65.

Pretax income for the second quarter of 2016 was $554,000 as compared with pretax income of $407,000 for the same quarter of 2015, an increase of 36%. Income tax expense for the second quarter of 2016 was $200,000 as compared with $15,000 for the same quarter of 2015 due to the effect of the Company’s application of deferred tax assets in the second quarter of 2015.

Total assets of the Company were $499 million at June 30, 2016, an increase of $14 million from December 31, 2015. Loans increased $27 million, or 11.34% between December 31, 2015 and June 30, 2016 while deposits increased $14 million, or 3.54%, between those dates.

The Bank’s second quarter net interest margin increased to 3.12%, compared with 3.03% during the first quarter of 2016, while the cost of funds remained unchanged at 0.12% between the periods. The Bank’s leverage capital ratio at June 30, 2016 was 10.20%.

With regard to asset quality, the Company’s non-performing assets (“NPAs”) at June 30, 2016 decreased $4.8 million, or 19.28%, from December 31, 2015, due primarily to a reduction in loans on nonaccrual status. At June 30, 2016, the ratio of nonperforming loans to total assets was 1.78% and the allowance for loan and lease losses to total loans was 2.05%.

“We are pleased with our progress regarding profitability and credit quality,” stated Scott Yelvington, President and Chief Executive Officer of the Company and Bank. “Our focus will remain on the reduction of NPAs and the profitable deployment of liquidity. We are also continuing our efforts to streamline operations to reduce costs.”

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.

Websites: www.nsfc.com www.nsfc.net


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		2016			2016			2015			2015			2015

Net income available to common stockholders	$	354		$	321		$	22,043		$	514		$	392
Basic income per average outstanding share		0.00			0.00			0.25			0.01			0.00
Diluted income per average outstanding share		0.00			0.00			0.25			0.01			0.00
Return on average assets		0.29	%		0.26	%		18.89	%		0.45	%		0.36	%
Return on average equity		2.50	%		2.28	%		253.24	%		6.13	%		4.73	%
Yield on interest earning assets		3.20	%		3.11	%		3.30	%		3.13	%		3.13	%
Cost of interest-bearing liabilities		0.19	%		0.19	%		0.19	%		0.20	%		0.19	%
Net interest spread		3.01	%		2.92	%		3.11	%		2.93	%		2.94	%
Net interest margin		3.06	%		2.96	%		3.15	%		2.97	%		2.98	%
Net charged-off loans	$	168		$	418		$	231		$	803		$	(1,681	)
Net charged-off loans to average loans (annualized)		0.26	%		0.70	%		0.40	%		1.38	%		(2.99	)%

	June 30,			March 31,			December 31,			September 30,			June 30,
		2016			2016			2015			2015			2015

Total stockholders' equity	$	56,868		$	56,431		$	55,673		$	34,135		$	33,214
Book value per common share	$	0.65		$	0.64		$	0.64		$	0.39		$	0.38
Common shares outstanding		87,604,088			87,604,088			87,604,088			87,604,088			87,604,088


	June 30,			March 31,			December 31,			September 30,			June 30,
		2016			2016			2015			2015			2015
Nonperforming assets
Loans on nonaccrual status	$	3,465		$	4,504		$	5,469		$	8,986		$	10,820
Loans 90 days or more past due, still accruing		0			700			787			266			198
Loan troubled debt restructurings		5,415			5,477			6,312			2,380			2,400
Total nonperforming loans		8,880			10,681			12,568			11,632			13,418
Other real estate owned		11,418			13,100			12,579			17,173			17,416
Total nonperforming assets	$	20,298		$	23,781		$	25,147		$	28,805		$	30,834

Nonperforming assets excluding trouble debt
restructurings	$	14,883		$	18,304		$	18,835		$	26,425		$	28,434
Nonperforming loans to total assets		1.78	%		2.19	%		2.59	%		2.52	%		3.02	%
Nonperforming assets to total assets		4.06	%		4.88	%		5.18	%		6.23	%		6.94	%
Nonperforming assets excluding trouble debt
restructurings to total assets		2.98	%		3.75	%		3.88	%		5.72	%		6.40	%
Allowance for loan and lease losses to total loans		2.05	%		2.20	%		2.53	%		3.02	%		3.41	%


NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)
Condensed Consolidated Balance Sheet	June 30,			March 31,			December 31,			September 30,			June 30,
		2016			2016			2015			2015			2015
Assets
Cash and due from banks	$	4,965		$	5,539		$	5,834		$	8,092		$	4,817
Interest bearing deposits in financial institutions -
maturities less than 90 days		66,743			53,004			55,380			63,044			60,455
Total cash and cash equivalents		71,708			58,543			61,214			71,136			65,272
Interest bearing deposits in financial institutions -
maturities of 90 days or greater		31,049			31,377			33,786			16,057			6,499
Securities available for sale		69,689			78,416			97,788			106,593			112,353
Securities held to maturity		13,428			13,496			10,564			10,771			10,838
Loans and leases, net of deferred fees		264,244			254,545			237,327			232,847			229,932
Less: Allowance for loan and lease losses		(5,425	)		(5,593	)		(6,011	)		(7,032	)		(7,834	)
Loans and leases, net		258,819			248,952			231,316			225,815			222,098
Federal Home Loan Bank stock		931			931			931			931			931
Office buildings and equipment, net		8,519			8,415			7,776			6,373			6,845
Other real estate owned		11,418			13,100			12,579			17,173			17,416
Accrued interest receivable		1,173			1,243			1,275			1,211			1,217
Bank owned life insurance		10,439			10,358			5,054			5,014			0
Deferred tax asset, net		21,479			22,112			21,869			(80	)		156
Other assets		1,112			746			1,195			1,022			879
Total assets	$	499,764		$	487,689		$	485,347		$	462,016		$	444,504
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing deposits	$	102,097		$	96,829		$	93,913		$	84,823		$	81,795
Interest-bearing deposits		307,334			301,926			301,509			309,432			299,564
Total deposits		409,431			398,755			395,422			394,255			381,359
Securities sold under repurchase agreements		18,015			16,052			18,994			19,618			14,836
Subordinated debentures		10,310			10,310			10,310			10,310			10,310
Advances from borrowers for taxes and insurance		2,195			3,089			2,195			776			1,904
Accrued interest payable and other liabilities		2,945			3,052			2,753			2,922			2,881
Total liabilities		442,896			431,258			429,674			427,881			411,290
Stockholders' Equity
Common stock		878			878			878			878			878
Additional paid-in capital		32,088			32,088			32,088			32,088			32,088
Retained earnings		28,375			28,021			27,700			5,657			5,143
Treasury stock, at cost		(4,674	)		(4,674	)		(4,674	)		(4,674	)		(4,674	)
Accumulated other comprehensive income (loss), net		201			118			(319	)		186			(221	)
Total stockholders' equity		56,868			56,431			55,673			34,135			33,214
Total liabilities and stockholders' equity	$	499,764		$	487,689		$	485,347		$	462,016		$	444,504

Common shares outstanding		87,604,088			87,604,088			87,604,088			87,604,088			87,604,088
Book value per common share	$	0.65		$	0.64		$	0.64		$	0.39		$	0.38


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,
		2016			2016			2015			2015			2015
Interest income
Loans (including fee income)	$	2,963		$	2,788		$	3,005		$	2,747		$	2,646
Securities
Taxable		377			420			491			544			514
Exempt from federal income tax		3			3			4			4			5
Federal funds sold and other		130			144			97			52			54
Total interest income		3,473			3,355			3,597			3,347			3,219
Interest expense
Time deposits		68			74			79			82			79
Other deposits		24			23			24			24			21
Repurchase agreements and federal funds purchased		0			1			1			0			0
Subordinated debentures		66			63			58			57			55
Total interest expense		158			161			162			163			155
Net interest income		3,315			3,194			3,435			3,184			3,064
Provision for loan and lease losses		0			0			(789	)		0			0
Net interest income after provision for
loan and lease losses		3,315			3,194			4,224			3,184			3,064
Noninterest income
Service fees on deposits		320			320			319			316			324
Gain on sale of securities		104			117			0			0			48
Net gain (loss) on sale of other assets		0			0			18			1,423			(10	)
Net gain on sale of other real estate owned		126			13			22			0			209
Bank owned life insurance income		82			53			40			14			0
Other operating income		416			381			419			428			413
Total noninterest income		1,048			884			818			2,181			984
Noninterest expense
Salaries and employee benefits		1,861			1,822			1,940			1,712			1,724
Occupancy and equipment, net		520			502			526			527			561
Data processing		427			459			234			501			376
Legal		81			19			52			51			117
FDIC insurance		118			101			98			96			136
Audit and other professional		151			168			151			143			162
Printing and supplies expense		45			37			36			42			63
Write-down of other real estate owned		126			0			1,282			1,264			0
Other real estate owned expense		171			131			97			136			88
Other operating expenses		309			305			303			329			414
Total noninterest expense		3,809			3,544			4,719			4,801			3,641
Net income before income taxes		554			534			323			564			407
Income tax expense		200			213			(21,720	)		50			15
Net income		354			321			22,043			514			392

Average common shares outstanding		87,604,088			87,604,088			87,604,088			87,604,088			87,604,088
Basic income per average outstanding share	$	0.00		$	0.00		$	0.25		$	0.01		$	0.00
Diluted income per average outstanding share	$	0.00		$	0.00		$	0.25		$	0.01		$	0.00


NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)

	June 30,			March 31,			December 31,			September 30,			June 30,
		2016			2016			2015			2015			2015
Loans
Commercial	$	12,556		$	11,883		$	12,144		$	14,019		$	13,687
Real estate-construction		17,531			15,369			21,609			15,127			14,300
Real estate-mortgage 1-4 family		49,530			41,499			28,449			27,977			29,379
Real estate-mortgage 5+ family		49,321			46,458			39,417			38,971			39,577
Real estate-mortgage commercial		123,717			129,042			125,978			126,375			123,176
Home equity		10,965			9,671			8,953			9,526			9,089
Installment		893			904			1,047			1,041			943
Deferred loan fees		(269	)		(281	)		(270	)		(189	)		(219	)
Total loans	$	264,244		$	254,545		$	237,327		$	232,847		$	229,932


	June 30,			March 31,			December 31,			September 30,			June 30
		2016			2016			2015			2015			2015
Deposits
Demand - noninterest bearing	$	102,097		$	96,829		$	93,913		$	84,823		$	81,795
Demand - interest bearing		75,389			67,678			67,571			72,612			65,853
Money market accounts		54,297			52,032			51,797			54,077			53,131
Savings		88,813			88,826			84,515			83,153			80,884
Time, $100,000 and over		46,989			50,442			53,093			52,744			49,223
Time, under $100,000		41,846			42,948			44,283			45,846			47,223
Time, brokered		0			0			250			1,000			3,250
Total deposits	$	409,431		$	398,755		$	395,422		$	394,255		$	381,359


NORTHERN STATES FINANCIAL CORPORATION
($000s, except per share data) (Unaudited)

	2Q 2016				1Q 2016				4Q 2015				3Q 2015				2Q 2015
	Average		Yield/		Average		Yield/		Average		Yield/		Average		Yield/		Average		Yield/
	balance		Rate		balance		Rate		balance		Rate		balance		Rate		balance		Rate
Earning assets
Loans	$	254,545	4.67	%	$	238,327	4.69	%	$	232,821	5.18	%	$	232,003	4.76	%	$	224,996	4.73	%
Securities taxable		88,592	1.70			98,630	1.70			112,635	1.74			124,301	1.75			119,487	1.72
Securities tax-exempt		295	5.42			295	6.78			428	5.61			436	6.42			435	5.52
Interest-bearing deposits		92,069	0.56			95,565	0.60			91,402	0.42			73,330	0.28			68,449	0.32
Total earning assets		435,501	3.20	%		432,817	3.11	%		437,286	3.30	%		430,070	3.13	%		413,367	3.13	%
Non interest earning assets		55,761				51,891				29,467				26,427				26,460
Total assets	$	491,262			$	484,708			$	466,753			$	456,497			$	439,827

Interest-bearing liabilities
Interest-bearing demand deposits	$	72,646	0.09	%	$	67,804	0.08	%	$	71,437	0.08	%	$	68,681	0.09	%	$	61,325	0.08	%
Money market deposits		52,475	0.05			52,205	0.05			53,107	0.05			52,291	0.05			50,062	0.05
Savings deposits		89,415	0.01			86,031	0.01			83,536	0.01			82,482	0.01			81,353	0.01
Time deposits		89,727	0.30			96,323	0.31			98,661	0.32			101,783	0.32			99,736	0.32
Other borrowings		26,040	1.01			28,338	0.90			30,559	0.77			28,085	0.81			25,492	0.86
Total interest-bearing liabilities		330,303	0.19	%		330,701	0.19	%		337,300	0.19	%		333,322	0.20	%		317,968	0.19	%
Demand deposits		98,491				92,377				90,408				85,324				83,126
Other liabilities		5,932				5,406				4,228				4,308				5,610
Stockholders' equity		56,536				56,224				34,817				33,543				33,123
Total liabilities and stockholders' equity	$	491,262			$	484,708			$	466,753			$	456,497			$	439,827

Net interest spread			3.01	%			2.92	%			3.11	%			2.93	%			2.94	%
Net interest margin			3.06	%			2.96	%			3.15	%			2.97	%			2.98	%

For Additional Information, Contact:
Scott Yelvington, President and Chief Executive Officer: (847) 775-8200 Ext. 1201