SOURCE: Northern Star Financial, Inc.

October 26, 2007 14:04 ET

UPDATE: Northern Star Financial, Inc. Reports Fourth Quarter Results and Year End Results

MANKATO, MN--(Marketwire - October 26, 2007) - Northern Star Financial, Inc. (OTCBB: NSBK) today announced results for the Company and its wholly owned subsidiary Northern Star Bank (Bank) for the fourth quarter and for the fiscal year ending June 30, 2007.

Northern Star Financial, Inc., the parent company of Northern Star Bank, reported a consolidated net loss of $142,714 in the fourth quarter and $569,242 for the fiscal year ended June 30, 2007 compared with a net loss of $242,343 in the fourth quarter and a net loss of $401,980 during fiscal year 2006. The Company reported a basic loss per share of $(0.77) during the fiscal year ending June 30, 2007 compared with a basic loss of $(0.64) per share during fiscal year ending June 30, 2006.

Our ability to sustain the growth of earning assets and to achieve continuous profitability remains a challenge. Comments in last year's report warned of a slow down in the economy, which has become a reality. The residential real estate market has slowed not only in our markets but throughout the nation. Net of recoveries, the Bank charged off $275,000 of loans no longer believed to be collectable thereby necessitating an $115,000 provision for loan loss expense during the fiscal year. Our reserve for loan and lease losses is at an adequate level to support the current quality of the Bank's loan portfolio.

We continued to invest in improvements to bank services during this past fiscal year when we implemented internet banking for our customers. We plan to institute a wider range of electronic bank service options during the coming months.

We have added experienced staff to our senior management team, laying a foundation for the future success of the Bank.

Last year we reported entering into Letters of Intent with investors to raise capital and to provide for the sale of the St. Cloud branch. While both the planned sale of the St. Cloud office and the sale of a fifty percent stake in the Company did not materialize; we successfully placed 130,000 shares of the Company's common stock at the rate of $5.00 per share during the fiscal year. The Board of Directors is continuing their efforts to improve earnings by strengthening the balance sheet with high levels of earnings assets supported by increased capital.

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 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.

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

Statements that Northern Star Financial, Inc. 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 competitive marketplace, changes in the interest rate environment, economic conditions, and outcome of pending litigations, 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 STOCKHOLDERS' EQUITY
                    YEARS ENDED JUNE 30, 2007 AND 2006


                                                    2007          2006
                                                ------------  ------------
                       ASSETS

Cash and due from banks                         $  1,270,856  $  1,306,523
Federal funds sold                                 1,447,688       156,309
                                                ------------  ------------
       Cash and cash equivalents                   2,718,544     1,462,832
Securities available for sale, at fair value       4,093,750     4,029,341
Restricted stock, at cost                            420,900       304,200
Loans held for sale                                        -       369,072
Loans receivable, net of allowance for loan and
 lease losses of $319,979 and $479,920            39,883,169    39,062,547
Property and equipment, net of depreciation          279,089       359,164
Cash surrender value of life insurance             1,109,770     1,068,291
Accrued interest receivable                          281,204       238,273
Other assets                                         152,311       442,452
                                                ------------  ------------

        Total Assets                            $ 48,938,737  $ 47,336,172
                                                ============  ============

      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Demand deposits                                 $  2,558,306  $  4,321,709
NOW and money market                               8,716,094     8,664,412
Savings                                            3,440,319     3,812,025
Time deposits                                     22,619,026    21,374,628
                                                ------------  ------------
       Total deposits                             37,333,745    38,172,774
Federal funds purchased                                                  -
Notes payable and other borrowings                 8,066,862     5,504,728
Subordinated notes payable                         1,450,000     1,800,000
Accrued interest payable                             486,173       348,966
Other liabilities                                     30,370        64,323
                                                ------------  ------------
       Total Liabilities                          47,367,150    45,890,791

Stockholders' Equity:
Common stock, $.01 par value, 15,000,000 shares
 authorized; 837,188 shares issued                     8,371         7,071
Undesignated stock, par value $.01 per share;
 5,000,000 shares authorized, no shares issued             -             -
Additional paid in capital                         5,987,838     5,339,138
Accumulated deficit                               (4,390,764)   (3,821,340)
Accumulated other comprehensive income (loss)        (33,858)      (79,488)
                                                ------------  ------------
       Total Stockholders' Equity                  1,571,587     1,445,381
                                                ------------  ------------

       Total Liabilities and Stockholders'
        Equity                                  $ 48,938,737  $ 47,336,172
                                                ============  ============




               NORTHERN STAR FINANCIAL, INC. AND SUBSIDIARY
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                    YEARS ENDED JUNE 30, 2007 AND 2006


                                                     2007          2006
                                                ------------  ------------
INTEREST INCOME
Loans receivable                                $  3,163,823  $  2,745,355
Securities available-for-sale                        182,713       171,331
Other                                                106,423        56,585
                                                ------------  ------------
       Total interest income                       3,452,959     2,973,271

INTEREST EXPENSE
Deposits                                           1,508,932     1,137,911
Borrowed Funds                                       534,677       352,346
                                                ------------  ------------
       Total interest expense                      2,043,609     1,490,257
                                                ------------  ------------

NET INTEREST INCOME                                1,409,350     1,483,014

PROVISON FOR LOAN LOSSES                             114,885       235,896
                                                ------------  ------------

NEW INTEREST INCOME AFTER PROVISION
  FOR LOAN LOSSES                                  1,294,465     1,247,118

NON-INTEREST INCOME
Other fees and service charges                       164,528       156,432
Gain on sale of loans held for sale                  108,166       155,434
Other income                                          12,580        31,642
                                                ------------  ------------
       Total non-interest income                     285,274       343,508

NON-INTEREST EXPENSE
Compensation and employee benefits                 1,032,499       905,791
Board fees                                            27,100        24,350
Occupancy                                            262,983       257,006
Printing and supplies                                 49,761        53,686
Furniture, fixtures and equipment depreciation        68,458        90,331
Data processing                                      192,200       199,443
Professional fees                                     87,614       140,781
Other                                                428,548       321,218
                                                ------------  ------------
       Total non-interest expense                  2,149,163     1,992,606
                                                ------------  ------------

NET LOSS                                        $   (569,424) $   (401,980)
                                                ============  ============

NET LOSS PER COMMON SHARE
Basic and diluted loss per share
 of common stock                                $      (0.77) $      (0.64)
                                                ============  ============

Contact Information

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