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Northern States Financial Corporation Reports Second Quarter 2018 Earnings

WAUKEGAN, Ill., July 18, 2018 (GLOBE NEWSWIRE) — Northern States Financial Corporation (OTC PINK:NSFC) (the “Company”), holding company for NorStates Bank (the “Bank”), an FDIC insured financial institution, today reported second quarter 2018 net income after tax of $410,000, a decrease of $456,000 compared to the first quarter 2018 net income after tax of $866,000.  Second quarter 2018 net income was negatively impacted by costs related to the impending merger with First Midwest Bancorp, Inc., which was announced on June 7, 2018.  The Company’s per share book value at June 30, 2018 was $0.58.

Some highlights during the second quarter of 2018 included the following:

  • Average loans increased by $20.5 million for the second quarter of 2018 compared with the second quarter of 2017.  Loan interest income increased $406,000 for the second quarter of 2018 compared to the second quarter of 2017.  The increased loan interest income contributed to a net interest margin for the second quarter of 2018 of 3.44% compared to 3.29% for the second quarter of 2017.
  • Non-performing assets, consisting of nonaccrual loans, ninety days or more past due loans still accruing interest, loans considered troubled debt restructurings and other real estate owned (“OREO”), decreased by $6.9 million from December 31, 2017 to June 30, 2018.  At June 30, 2018, the allowance for loan and lease losses to total loans and leases ratio was 2.05%.
  • Second quarter 2018 noninterest income was impacted by a loss on the sale of OREO of $558,000.  Without this loss, noninterest income would have been $851,000, a decrease of $26,000 compared to the first quarter of 2018.
  • Noninterest expense increased $179,000 during the second quarter of 2018 compared to the first quarter of 2018.  Combined legal fees and audit and other professional fees increased $159,000 during the second quarter 2018 compared to the first quarter of 2018 in part due to expenses related to the impending merger with First Midwest Bancorp, Inc. 
  • The Company focused on growing deposits which, as of June 30, 2018, increased $59.0 million, or 15.4%, as compared with June 30, 2017.  Low cost demand – noninterest bearing deposits and demand – interest bearing deposits increased $16.4 million and $20.8 million, respectively, at June 30, 2018 as compared with June 30, 2017.  Low cost deposits assisted the Company in maintaining a low cost of funds during the second quarter of 2018 at 29 basis points, with the Bank’s cost of funds at 19 basis points.

“Until the merger with First Midwest Bancorp, Inc. closes, deposit growth and reducing non-performing assets will remain a focus along with our continued efforts to reduce expenses and increase profitability,” stated Scott Yelvington, President and Chief Executive Officer.

About Northern States Financial Corporation

Northern States Financial Corporation is the holding company for NorStates Bank. NorStates Bank maintains its principal executive offices in Waukegan, Illinois. NorStates Bank is a client-focused bank committed to providing quality financial services with a personal touch through a complete line of loan, deposit and cash management services. It provides these financial services through eight banking locations in Lake County, Illinois. NorStates Bank’s website is www.norstatesbank.com.

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 limited to, the risk that the merger may not be completed or may not be completed in a timely manner, 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.

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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   2018   2018   2017   2017   2017
                     
Net income (loss) available to common stockholders   $ 410     $ 866     $ (6,266 )   $ 963     $ (1,448 )
Basic income (loss) per average outstanding share     0.00       0.01       (0.07 )     0.01       (0.02 )
Diluted income (loss) per average outstanding share     0.00       0.01       (0.07 )     0.01       (0.02 )
Return on average assets     0.33 %     0.71 %     -4.92 %     0.78 %     -1.19 %
Return on average equity     3.06 %     6.57 %     -42.46 %     6.62 %     -9.77 %
Yield on interest-earning assets     3.71 %     3.64 %     3.55 %     3.71 %     3.44 %
Cost of interest-bearing liabilities     0.40 %     0.29 %     0.26 %     0.24 %     0.21 %
Net interest spread     3.31 %     3.35 %     3.29 %     3.47 %     3.23 %
Net interest margin     3.44 %     3.45 %     3.37 %     3.54 %     3.29 %
Net charged-off (recovered) loans   $ 531     $ (76 )   $ (1 )   $ (1,172 )   $ (1 )
Net charged-off loans to average loans (annualized)     0.68 %     (0.10 ) %   0.00 %     (1.55 ) %   0.00 %
                     
                     
    June 30,   March 31,   December 31,   September 30,   June 30,
    2018   2018   2017   2017   2017
                     
Total stockholders’ equity   $ 53,501     $ 53,138     $ 52,474     $ 58,859     $ 57,795  
Book value per common share   $ 0.58     $ 0.58     $ 0.57     $ 0.65     $ 0.64  
Common shares outstanding     92,302,244       92,252,244       92,252,244       90,345,174       90,345,174  
                     
                     
    June 30,   March 31,   December 31,   September 30,   June 30,
    2018   2018   2017   2017   2017
Nonperforming assets                    
Loans on nonaccrual status   $ 11,180     $ 11,410     $ 12,545     $ 3,444     $ 3,407  
Loans 90 days or more past due, still accruing     260       137       434       561       537  
Loan troubled debt restructurings     554       4,177       4,783       4,845       4,969  
Total nonperforming loans     11,994       15,724       17,762       8,850       8,913  
Other real estate owned     942       1,898       2,039       2,217       6,935  
Total nonperforming assets   $ 12,936     $ 17,622     $ 19,801     $ 11,067     $ 15,848  
                     
Nonperforming assets excluding trouble debt                    
restructurings   $ 12,832     $ 13,445     $ 15,018     $ 6,222     $ 10,879  
Nonperforming loans to total assets     2.26 %     3.23 %     3.58 %     1.74 %     1.86 %
Nonperforming assets to total assets     2.44 %     3.62 %     3.99 %     2.18 %     3.30 %
Nonperforming assets excluding trouble debt                    
restructurings to total assets     2.33 %     2.76 %     3.03 %     1.22 %     2.27 %
Allowance for loan and lease losses to total loans     2.05 %