SOURCE: Northern States Financial Corporation

Northern States Financial Corporation

March 19, 2015 17:55 ET

Northern States Financial Corporation Reports 2014 Financial Results

WAUKEGAN, IL--(Marketwired - Mar 19, 2015) - Northern States Financial Corporation (OTCQB: NSFC), holding company for NorStates Bank (the "Bank"), today reported net income available to common stockholders for 2014 of $15,564,000 or $0.26 per share compared with a net loss for 2013 of $2,771,000 or $0.65 per share. A significant portion of the Northern States Financial Corporation's (the "Company") net income for 2014 resulted from the discount recognized on the redemption of its preferred stock in the second quarter of 2014. Per share book value at December 31, 2014 was $0.37.

For the three months ended December 31, 2014, the Company showed a net loss of $142,000 as compared with a net loss of $1,197,000 for the fourth quarter of 2013.

The financial results at the Bank showed 2014 earnings of $543,000 and a fourth quarter net loss of $60,000. The fourth quarter loss resulted from the disposition of non-performing assets totaling $4.9 million at a loss of $440,000 as the Bank continued its efforts to increase its overall asset quality. The Bank's December 31, 2014 leverage capital ratio was 9.88%.

Total assets for the Company were $422 million at December 31, 2014, increasing 7.5% from year-end 2013. During 2014, the Company's capital and deposits increased $22.7 million and $9.6 million, respectively with capital increasing $21.8 million due to the successful April 2014 capital raise. Since the capital raise, management has continued to work to reposition the Company's balance sheet.

In regard to asset quality, the Company's non-performing assets ("NPAs"), consisting of nonaccrual loans, loans ninety or more days past due, still accruing, loans considered troubled debt restructurings and other real estate owned, totaled $37.5 million at December 31, 2014, a reduction of $19.1 million or 34% from $56.6 million at December 31, 2013. Management anticipates continued decreases in NPAs in 2015 as a result of credit remediation and asset sales.

"2014 was a transformative year for the Company and the Bank," stated Scott Yelvington, President and Chief Operating Officer. "A successful capital raise has breathed new life into our organization. We remain focused on the reduction of non-performing assets and were pleased with the $10.0 million reduction in the fourth quarter. Further reductions, cost containment and our ability to deploy liquidity in a disciplined and prudent manner will enhance profitability in the coming quarters."

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 and statement to reflect new information or subsequent events or circumstances.

             
NORTHERN STATES FINANCIAL CORPORATION       
CONDENSED CONSOLIDATED BALANCE SHEETS       
As of December 31, 2014 and 2013       
(In thousands of dollars) (Unaudited)   2014     2013  
                 
  Assets                
Cash and due from banks   $ 8,258     $ 5,235  
Interest bearing deposits in financial institutions - maturities less than 90 days     26,727       42,350  
  Total cash and cash equivalents     34,985       47,585  
Interest bearing deposits in financial institutions - maturities of 90 days or greater     8,483       9,227  
Securities available for sale     121,368       92,407  
Securities held to maturity (fair value $16,449 at December 31, 2014)     16,305       0  
Loans and leases, net of deferred fees     219,049       225,295  
Less: Allowance for loan and lease losses     (6,541 )     (9,130 )
  Loans and leases, net     212,508       216,165  
Federal Home Loan Bank stock     931       931  
Office buildings and equipment, net     7,957       8,262  
Other real estate owned     16,514       14,357  
Accrued interest receivable     1,158       1,101  
Other assets     1,814       2,377  
  Total assets   $ 422,023     $ 392,412  
    Liabilities and Stockholders' Equity                
Liabilities                
Deposits                
  Demand - noninterest bearing   $ 79,378     $ 71,970  
  Interest bearing     277,352       275,159  
    Total deposits     356,730       347,129  
Securities sold under repurchase agreements     18,447       16,213  
Subordinated debentures     10,310       10,310  
Advances from borrowers for taxes and insurance     1,485       1,119  
Accrued interest payable and other liabilities     2,718       7,987  
    Total liabilities     389,690       382,758  
Stockholders' Equity                
Common stock     878       1,789  
Preferred stock     0       17,198  
Warrants (584,084 issued and outstanding at December 31, 2013)     0       681  
Additional paid-in capital     32,088       7,326  
(Accumulated deficit) retained earnings     4,571       (10,993 )
Treasury stock, at cost     (4,674 )     (4,674 )
Accumulated other comprehensive loss, net     (530 )     (1,673 )
  Total stockholders' equity     32,333       9,654  
    Total liabilities and stockholders' equity   $ 422,023     $ 392,412  
                     
                     
                     
NORTHERN STATES FINANCIAL CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
Twelve and three months ended December 31, 2014 and 2013  
(In thousands of dollars, except per share data) (Unaudited)  
   
    Twelve months ended     Three months ended  
 
Years ended December 31,
 
 
December 31, 2014  
 
 
 
December 31, 2013  
 
 
 
December 31, 2014  
 
 
 
December 31, 2013  
 
                                 
Interest income                                
  Loans (including fee income)   $ 9,855     $ 12,267     $ 2,625     $ 3,086  
  Securities                                
    Taxable     2,050       1,413       683       360  
    Exempt from federal income tax     28       92       6       22  
  Federal funds sold and other     158       166       40       49  
      Total interest income     12,091       13,938       3,354       3,517  
Interest expense                                
  Time deposits     262       338       66       75  
  Other deposits     91       92       24       25  
  Repurchase agreements and federal funds purchased     2       2       1       1  
  Subordinated debentures     225       240       54       60  
      Total interest expense     580       672       145       161  
Net interest income     11,511       13,266       3,209       3,356  
Provision for loan and lease losses     0       3,400       0       900  
Net interest income after provision for loan and lease losses     11,511       9,866       3,209       2,456  
Noninterest income                                
  Service fees on deposits     1,575       1,661       377       455  
  Gain on sale of securities     94       1,749       16       0  
  Net gain (loss) on sale of other real estate owned     (51 )     88       (440 )     (15 )
  Other operating income     1,657       1,608       400       406  
      Total noninterest income     3,275       5,106       353       846  
Noninterest expense                                
  Salaries and employee benefits     6,226       5,680       1,726       1,446  
  Occupancy and equipment, net     2,145       2,284       492       515  
  Data processing     2,136       1,883       679       463  
  Legal     303       634       74       156  
  FDIC insurance     693       884       135       222  
  Audit and other professional     446       697       94       82  
  Printing and supplies expense     165       193       49       49  
  Write-down of other real estate owned     259       1,736       26       181  
  Other real estate owned expense     632       814       27       413  
  Other operating expenses     1,571       1,733       402       684  
      Total noninterest expense     14,576       16,538       3,704       4,211  
Net income (loss) before income taxes     210       (1,566 )     (142 )     (909 )
Income tax expense     0       17       0       (14 )
Net income (loss)     210       (1,583 )     (142 )     (895 )
  Discount on redemption of preferred stock     (15,883 )     0       0       0  
  Dividends to preferred stockholders     516       1,037       0       264  
  Accretion of discount on preferred stock     13       151       0       38  
Net income (loss) available to common stockholders   $ 15,564     $ (2,771 )   $ (142 )   $ (1,197 )
                                 
Basic income (loss) per average outstanding share   $ 0.26     $ (0.65 )   $ (0.00 )   $ (0.28 )
Diluted income (loss) per average outstanding share   $ 0.26     $ (0.65 )   $ (0.00 )   $ (0.28 )
                                 
                                 
                                 
NORTHERN STATES FINANCIAL CORPORATION  
KEY PERFOMANCE DATA  
($ 000s, except per share data)  
                   
                   
Year ended December 31:   2014     2013        
                         
Net Income   $ 15,564     $ (2,771 )        
Basic earnings per share   $ 0.26     $ (0.65 )        
Diluted earnings per share   $ 0.26     $ (0.65 )        
Return on average assets     3.81 %     -0.68 %        
Return on average equity     61.27 %     -20.66 %        
Yield on interest earning assets     3.17 %     3.54 %        
Cost of interest bearing liabilities     0.19 %     0.21 %        
Net interest spread     2.98 %     3.33 %        
Net interest margin     3.02 %     3.37 %        
Net charged-off loans   $ 2,589     $ 14,997          
Net charged-off loans to average loans     1.19 %     5.90 %        
                         
Quarter ended:   Dec. 31, 2014     Sep. 30, 2014     Dec. 31, 2013  
                         
Net income   $ (142 )   $ 283     $ (1,197 )
Basic earnings per share   $ (0.00 )   $ 0.00     $ (0.28 )
Diluted earnings per share   $ (0.00 )   $ 0.00     $ (0.28 )
Return on average assets     -0.13 %     0.27 %     -1.17 %
Return on average equity     -1.75 %     3.50 %     -42.16 %
Yield on interest earning assets     3.39 %     3.10 %     3.55 %
Cost of interest bearing liabilities     0.18 %     0.18 %     0.20 %
Net interest spread     3.21 %     2.92 %     3.35 %
Net interest margin     3.24 %     2.96 %     3.39 %
Net charged-off loans   $ 1,866     $ 163     $ 6,542  
Net charged-off loans to average loans annualized     3.45 %     0.30 %     11.05 %
                         
    Dec. 31, 2014     Dec. 31, 2013          
                         
Total Stockholders' Equity   $ 32,333     $ 9,654          
Deferred tax asset     25,566       27,157          
Deferred tax asset valuation allowance     (25,183 )     (26,071 )        
Book Value per Share   $ 0.37     $ 2.26          
Number of Common Shares Outstanding     87,604,088       4,270,755          
                         
                         
                         
    Dec. 31, 2014     Dec. 31, 2013          
                         
Assets   $ 422,023     $ 392,412          
                         
Loans                        
  Commercial     14,239       13,929          
  Real estate-construction     11,600       18,963          
  Real estate-mortgage 1-4 family     30,546       29,285          
  Real estate-mortgage 5+ family     32,968       29,019          
  Real estate-mortgage commercial     119,669       119,897          
  Home equity     9,131       13,020          
  Installment     1,069       1,247          
  Deferred loan fees     (173 )     (65 )        
    Total loans     219,049       225,295          
                         
Deposits                        
  Demand-noninterest bearing   $ 79,378     $ 71,970          
  Demand-interest bearing     61,313       60,815          
  Money market accounts     51,046       52,490          
  Savings     77,789       73,907          
  Time, $100,000 and over     37,483       33,226          
  Time, under $100,000     49,471       54,721          
  Time, brokered     250       0          
    Total deposits     356,730       347,129          
                         
Nonperforming assets (NPAs)                        
  Nonaccrual loans   $ 16,551     $ 19,062          
  90 days or more past due, still accruing     1,126       776          
  Trouble debt restructurings     3,288       22,437          
    Total nonperforming loans     20,965       42,275          
  Other real estate owned     16,514       14,357          
    Total NPAs     37,479       56,632          
NPAs excluding troubled debt restructurings     34,191       34,195          
Nonperforming loans to total loans     9.57 %     18.76 %        
NPAs to total assets     8.88 %     14.43 %        
NPAs excluding troubled debt restructurings to total assets     8.10 %     8.71 %        
                         

Contact Information

  • For Additional Information, Contact:
    Scott Yelvington
    President and Chief Executive Officer
    (847) 244-6000 Ext. 201
    Websites: www.nsfc.com | www.nsfc.net