SOURCE: Northern States Financial Corporation

Northern States Financial Corporation

November 03, 2014 17:02 ET

Northern States Financial Corporation Reports Third Quarter Earnings

WAUKEGAN, IL--(Marketwired - Nov 3, 2014) - Northern States Financial Corporation (OTCQB: NSFC), holding company for NorStates Bank, an FDIC insured financial institution, today reported third quarter 2014 net income of $283,000. Per share book value at September 30, 2014 was $0.37.

The financial results at NorStates Bank (the "Bank") showed third quarter earnings of $363,000 and year to date earnings of $603,000. The Bank made no provision to the allowance for loan and lease losses during the third quarter of 2014. Management believed as of September 30, 2014, the allowance for loan and lease losses was adequate at 3.9% of total loans.

Total assets for Northern States Financial Corporation (the "Company") were $423 million at September 30, 2014, an increase of 7.9% from year-end 2013. While current loan volume was steady during the third quarter, overall loans did decline, and the increase in assets was mainly attributable to an increase to securities available for sale. The Bank's third quarter net interest margin was 3.00% with the cost of funds of 0.09%. The leverage capital ratio was 10.27%. 

In regards to asset quality, the Company's 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, have shown a reduction of $7.6 million from December 31, 2013 to September 30, 2014. However, during the third quarter of 2014, NPAs increased $7.9 million. This increase during the third quarter was primarily due to downgrading previously identified credits to NPA status, which included placing 2 credits totaling $8.7 million on nonaccrual status and classifying a credit totaling $1.3 million as a troubled debt restructuring. Partially offsetting these downgrades was a $1.4 million credit upgraded to performing from nonaccrual status and the sale of $521,000 of other real estate owned. Management does not consider these third quarter events to be a negative trend in regards to ongoing credit quality. Management anticipates a substantial decrease in NPAs in the fourth quarter of 2014 and the first quarter of 2015 as a result of credit remediation and asset sales.

"Our efforts to reduce expenses and increase income continue to have a positive effect on earnings," stated Scott Yelvington, President and Chief Executive Officer. "However, our primary focus remains on the reduction of non-performing assets which will be essential to achieving our earnings goals."

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.

 
 
NORTHERN STATES FINANCIAL CORPORATION 
CONDENSED CONSOLIDATED BALANCE SHEETS 
September 30, 2014 and December 31, 2013   September 30,     December 31,  
(In thousands of dollars) (Unaudited)   2014     2013  
    Assets                
Cash and due from banks   $ 4,272     $ 5,235  
Interest bearing deposits in financial institutions - maturities less than 90 days     40,908       42,350  
  Total cash and cash equivalents     45,180       47,585  
Interest bearing deposits in financial institutions - maturities of 90 days or greater     9,971       9,227  
Securities available for sale     117,447       92,407  
Securities held to maturity (fair value $14,917 at September 30, 2014)     14,968       0  
Loans and leases, net of deferred fees     213,031       225,295  
Less: Allowance for loan and lease losses     (8,407 )     (9,130 )
  Loans and leases, net     204,624       216,165  
Federal Home Loan Bank stock     931       931  
Office buildings and equipment, net     8,041       8,262  
Other real estate owned     18,933       14,357  
Accrued interest receivable     1,196       1,101  
Other assets     1,931       2,377  
  Total assets   $ 423,222     $ 392,412  
    Liabilities and Stockholders' Equity                
Liabilities                
Deposits                
  Demand - noninterest bearing   $ 71,285     $ 71,970  
  Interest bearing     286,520       275,159  
    Total deposits     357,805       347,129  
Securities sold under repurchase agreements     20,100       16,213  
Subordinated debentures     10,310       10,310  
Advances from borrowers for taxes and insurance     445       1,119  
Accrued interest payable and other liabilities     2,502       7,987  
    Total liabilities     391,162       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     4,713       (10,993 )
Treasury stock, at cost     (4,674 )     (4,674 )
Accumulated other comprehensive income, net     (945 )     (1,673 )
  Total stockholders' equity     32,060       9,654  
    Total liabilities and stockholders' equity   $ 423,222     $ 392,412  
                 
 
NORTHERN STATES FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and nine months ended September 30, 2014 and 2013
(In thousands of dollars, except per share data) (Unaudited)   Three months ended     Nine months ended  
    September 30,     September 30,     September 30,     September 30,  
    2014     2013     2014     2013  
Interest income                                
  Loans (including fee income)   $ 2,319     $ 2,868     $ 7,230     $ 9,181  
  Securities                                
    Taxable     619       333       1,367       1,053  
    Exempt from federal income tax     5       22       22       70  
  Federal funds sold and other     36       38       118       117  
      Total interest income     2,979       3,261       8,737       10,421  
Interest expense                                
  Time deposits     63       81       196       263  
  Other deposits     23       23       67       67  
  Repurchase agreements and federal funds purchased     0       0       1       1  
  Subordinated debentures     54       61       171       180  
      Total interest expense     140       165       435       511  
Net interest income     2,839       3,096       8,302       9,910  
Provision for loan and lease losses     0       500       0       2,500  
Net interest income after provision for loan and lease losses     2,839       2,596       8,302       7,410  
Noninterest income                                
  Service fees on deposits     408       425       1,198       1,206  
  Gain on sale of securities     0       0       78       1,749  
  Net gain (loss) on sale of other real estate owned     4       10       389       103  
  Other operating income     438       415       1,257       1,202  
      Total noninterest income     850       850       2,922       4,260  
Noninterest expense                                
  Salaries and employee benefits     1,566       1,440       4,500       4,234  
  Occupancy and equipment, net     537       554       1,653       1,769  
  Data processing     528       484       1,457       1,420  
  Legal     49       175       229       478  
  FDIC insurance     131       223       558       662  
  Audit and other professional     126       257       352       615  
  Printing and supplies expense     40       41       116       144  
  Write-down of other real estate owned     82       130       233       1,555  
  Other real estate owned expense     117       179       605       401  
  Loan and collection     (124 )     (187 )     (8 )     (193 )
  Other operating expenses     354       383       1,177       1,242  
      Total noninterest expense     3,406       3,679       10,872       12,327  
Net income (loss) before income taxes     283       (233 )     352       (657 )
Income tax expense     0       31       0       31  
Net income (loss)     283       (264 )     352       (688 )
  Discount on redemption of preferred stock     0       0       (15,733 )     0  
  Dividends to preferred stockholders     0       261       366       773  
  Accretion of discount on preferred stock     0       38       13       113  
Net income (loss) available to common stockholders   $ 283     $ (563 )   $ 15,706     $ (1,574 )
                                 
Basic income (loss) per average outstanding share   $ 0.00     $ (0.13 )   $ 0.31     $ (0.37 )
Diluted income (loss) per average outstanding share   $ 0.00     $ (0.13 )   $ 0.31     $ (0.37 )
                                 
                                 
Basic income (loss) per end of period share   $ 0.00     $ (0.13 )   $ 0.18     $ (0.37 )
                                 
                                 

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