SOURCE: Northern Star Financial, Inc.

December 21, 2007 19:05 ET

Northern Star Financial, Inc. Reports First Quarter Results

MANKATO, MN--(Marketwire - December 21, 2007) - Northern Star Financial, Inc. (OTCBB: NSBK) today announced results for the Company and its wholly owned subsidiary Northern Star Bank for the first quarter of the fiscal year ending June 30, 2008.

Northern Star Financial, Inc., the parent company of Northern Star Bank, reported a net loss of $129,893 in the first quarter ended September 30, 2007 compared with a net loss of $93,173 in the first quarter of fiscal year 2006. The basic loss per share of $0.16 for the first quarter of the fiscal year ending June 30, 2008 compared with a basic loss per share of $0.13 during the first quarter of the fiscal year ending June 30, 2007.

The Company's total assets decreased to $48.28 million at the end of the first quarter down from $48.94 million for the fiscal year ending June 30, 2007. Total deposits for the first quarter ended September 30, 2007 decreased $426 thousand to $36.91 million down from $37.33 million for the fiscal year ending June 30, 2007. Loan receivables net of allowance for loan losses decreased by $1.64 million over the prior fiscal year end.

When comparing the Company's first quarter fiscal year 2008 operating results with the results of operations during the same period of the prior fiscal year, President Stienessen said, "The increased cost associated with increased competition for deposits has more than offset the reduction in non-interest expenses we have been able to achieve." Stienessen reported that the bank's cost to fund its assets had increase 40 basis points during the past twelve months while the yield on bank assets remained unchanged. Stienessen indicated that he did not expect to see any near-term improvement in the cost of funding bank assets as competition for deposits is expected to remain intense as a result of several new banks entering the market. Stienessen advised, "More competitors coupled with the reduced value clients place on deposits insured by the federal government is likely to result in more expensive money. Our challenge is to find a way to pass along the increased cost of funds to our borrowing clients in a moderating economy." Stienessen commented that, "Clients are increasingly turning to higher yields available from a growing number of non-banks offering bank-like products without the safety of government insurance."

The Company commenced operations on January 25, 1999 as a bank holding company whose subsidiary provides financial services. Northern Star Bank's business is that of a financial intermediary and consists primarily of attracting deposits from the general public and using such deposits, together with borrowings and other funds, to make secured and unsecured loans to business and professional concerns and mortgage loans secured by residential real estate and other consumer loans. The Bank operates two full-service offices that are located in Mankato and St. Cloud, Minnesota.

THIS PRESS RELEASE CONTAINS FORWARD-LOOKING INFORMATION AND ACTUAL RESULTS MAY DIFFER.

Statements that Northern Star Financial may publish, including those in this announcement that are not strictly historical, are "forward-looking" statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are inherently unreliable and actual results may vary. Factors which could cause actual results to differ from these forward-looking statements include changes in the competitive marketplace, changes in the interest rate environment, economic conditions, outcome of pending litigation, risks associated with credit quality and other factors discussed in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

               Northern Star Financial, Inc. and Subsidiary
              Consolidated Statements of Financial Condition


                                              September 30,    June 30,
                                              -------------  -------------
ASSETS                                            2007           2007
                                              -------------  -------------

Cash and due from banks                       $   1,212,572  $   1,270,856
Federal funds sold                                  803,084      1,447,688
                                              -------------  -------------
  Cash and cash equivalents                       2,015,656      2,718,544
Securities available for sale, at fair value      5,694,962      4,093,750
Federal Home Loan Bank stock, at cost               411,800        420,900
Loans held for sale                                 144,637              -
Loans receivable, net of allowance for loan
 and lease losses of $320,729 and $456,580       38,245,426     39,883,169
Property and equipment, net of depreciation         263,871        279,089
Accrued interest receivable                         318,312        281,204
Other assets                                      1,186,303      1,262,081
                                              -------------  -------------
     Total Assets                             $  48,280,967     48,938,737
                                              =============  =============


LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits                               $   2,791,113      2,558,306
NOW and money market                              8,724,276      8,716,094
Savings                                           3,898,432      3,440,319
Time deposits                                    21,493,484     22,619,026
                                              -------------  -------------
  Total deposits                                 36,907,305     37,333,745
Federal funds sold                                        -
Notes payable and other borrowings                7,811,195      8,066,862
Convertible subordinated notes payable            1,500,000      1,450,000
Accrued interest payable                            566,713        486,173
Other libilities                                     27,370         30,370
                                              -------------  -------------
     Total Liabilities                           46,812,583     47,367,150

Stockholders' Equity
Common stock, $0.01 par value, 15,000,000
 shares authorized; 837,188 and 827,188
 shares issued and outstanding respectively           8,371          8,371
Undesignated stock, par value $0.01 per share
 5,000,000 shares authorized, no shares issued
Paid in Capital                                   5,987,838      5,987,838
Accumulated deficit                              (4,520,657)    (4,390,764)
Accumulated comprehensive income (loss)              (7,168)       (33,858)
                                              -------------  -------------
     Total Stockholders' Equity                   1,468,384      1,571,587
                                              -------------  -------------
     Total Liabilities and Stockholders'
      Equity                                     48,280,967     48,938,737
                                              =============  =============




               Northern Star Financial, Inc. and Subsidiary
              Unaudited Consolidated Statements of Operation


                                                     For the Three Months
                                                      Ended September 30,
                                                    ----------------------
                                                       2007        2006
                                                    ----------  ----------

Interest Income:
Loans receivable                                    $  731,153  $  724,751
Securities available for sale                           59,129      41,938
Federal funds sold                                      22,424      14,170
                                                    ----------  ----------
    Total interest income                              812,706     780,859
                                                    ----------  ----------

Interest Expense:
Deposits                                               386,243     342,963
Borrowed funds                                         156,837     104,865
                                                    ----------  ----------
    Total interest expense                             543,080     447,828
                                                    ----------  ----------

Net interest income                                    269,626     333,031
Provision for loan and lease losses                          -           -
                                                    ----------  ----------

    Net interest income after provision
     for loan and lease losses                         269,626     333,031
                                                    ----------  ----------

Non-interest income:
Other fees and service charges                          51,181      44,138
Gain on sale of loans                                   18,874      28,155
                                                    ----------  ----------
    Total non-interest income                           70,055      72,293
                                                    ----------  ----------

Non-interest expense:
Compensation and employee benefits                     238,708     250,869
Board fees                                               5,750       4,500
Occupancy                                               64,340      63,958
Printing and Supplies                                    7,381       9,616
Furniture, fixtures & equipment depreciation            11,310      20,980
Data Processing                                         53,820      40,244
Professional fees                                       11,305      15,712
Other                                                   76,960      77,936
                                                    ----------  ----------
                                                       469,574     483,815
                                                    ----------  ----------

Income (loss) before income tax benefit               (129,893)    (93,173)
Income tax benefit                                           -           -
                                                    ----------  ----------

Net income (loss)                                   $ (129,893) $  (93,173)
                                                    ==========  ==========

Net income (loss) per common share
Basic and diluted income (loss) per share
 of common stock                                    $    (0.16) $    (0.13)
                                                    ==========  ==========

Contact Information

  • Contact:
    Thomas Stienessen
    Chief Executive Officer
    (507) 387-2265