WAUKEGAN, IL--(Marketwired - Nov 3, 2014) - Northern States Financial Corporation (
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