Northern States Reports First Quarter Net Income Decrease

Interest Income Declines with Lower Rates; Interest Charged Off on Creditor's

Loan; Board Declares Increased Dividend



Apr 18, 2001, 01:00 ET from Northern State Financial Corporation

    WAUKEGAN, Ill., April 18 /PRNewswire/ -- Northern States Financial
 Corporation (Nasdaq:   NSFC), holding company for the Bank of Waukegan, today
 reported a decrease in first quarter earnings of  $.09 per share or 19.3
 percent to $1,656,000, or $.37 diluted earnings per share, compared with
 $2,051,000, or $.46 diluted earnings per share for the first quarter of 2000.
     Contributing to the decrease in profitability was the decline in net
 interest income as the result of the reduction in the prime rate.  Another
 factor was that the Company recorded a one-time tax benefit of $153,000 in the
 first quarter of 2000 relating to a charitable contribution on the sale of a
 parcel of real estate owned.  When discounting this one-time factor from 2000,
 net income for the first three months of the current year was 12.8 percent
 less than last year.  A third contributing element was the reversing of
 $70,000 in interest on loans to one creditor, as the loans became impaired.
     There was no provision for loan losses for the quarter ending March 31,
 2001 or for the same quarter last year.  Northern States Financial Corporation
 had nonperforming loans at March 31, 2001 of $3,093,000 or 1.04 percent of
 gross loans, a decrease of $1,019,000 from December 31, 2000.  Based on
 management's analysis, the allowance for loan losses at March 31, 2001 of
 $4,112,000, is adequate to cover current loan-loss exposure.
     Northern State's efficiency ratio, noninterest expense divided by the sum
 of net interest income and noninterest income, was 52.03 percent for the first
 quarter of 2001 as compared to 46.65 percent for the same quarter of 2000.  A
 decreasing ratio is preferred.  The decrease in net interest income coupled
 with increases to noninterest expenses for higher energy costs account for
 much of the change in the efficiency ratio.
     The company's total assets were $537 million at March 31, 2001, largely
 unchanged from assets of $538 million at December 31, 2000.  Loans were at
 $297 million at March 31, 2001 decreasing slightly from $299 million at
 year-end.  Real estate construction loans increased $4 million indicating
 continued strength in the local building industry.  Deposits decreased $5
 million as municipal depositors drew down balances for operating purposes
 prior to collection of real estate taxes.
     The board of directors of the Northern States Financial Corporation has
 declared a cash dividend of $.48 per share payable on June 1, 2001 to
 stockholders of record at May 15, 2001.  This is a 2.1% percent increase to
 the semi-annual dividend compared to the December 1, 2000 cash dividend of
 $.47 per share.
     Annualized, this dividend would mark the NINETEENTH consecutive year of
 increases in dividends paid to stockholders and represents a dividend yield of
 approximately 5 percent.
     Northern States Financial Corporation is the holding company for the Bank
 of Waukegan, a full-service commercial bank founded in 1962 with six branches
 in Lake County, Illinois, serving the populations of northeastern Illinois and
 southeastern Wisconsin.
 
                     NORTHERN STATES FINANCIAL CORPORATION
                              KEY PERFORMANCE DATA
                        ($ 000's except per share data)
 
 
     Quarter ended March 31,:           2001            2000      % Change
 
     Net Income                       $1,656          $2,051        -19.3%
     Basic Earnings Per Share          $0.37           $0.46        -19.6%
     Diluted Earnings Per Share        $0.37           $0.46        -19.6%
     Return on Average Assets          1.24%           1.73%        -28.3%
     Return on Average Equity          8.99%          12.53%        -28.3%
     Efficiency Ratio                 52.03%          46.65%
 
                                   March 31,         Dec. 31,
                                      2001             2000         % Change
 
     Total Assets                   $536,653        $538,256         -0.3%
     Gross Loans                     296,837         298,851         -0.7%
     Total Deposits                  368,160         373,121         -1.3%
     Total Stockholders' Equity       75,106          72,439          3.7%
     Nonperforming Loans               3,093           4,112        -24.8%
     Nonperforming Loans to
      Gross Loans                      1.04%           1.38%        -24.6%
 
 
 
                       NORTHERN STATES FINANCIAL CORPORATION
                                  DIVIDEND HISTORY
 
                                      June 1      December 1         Total
 
     1996                              $0.19           $0.21         $0.40
     1997                               0.23            0.25          0.48
     1998                               0.28            0.32          0.60
     1999                               0.35            0.40          0.75
     2000                               0.43            0.47          0.90
     2001                               0.48
 
 
 

SOURCE Northern State Financial Corporation
    WAUKEGAN, Ill., April 18 /PRNewswire/ -- Northern States Financial
 Corporation (Nasdaq:   NSFC), holding company for the Bank of Waukegan, today
 reported a decrease in first quarter earnings of  $.09 per share or 19.3
 percent to $1,656,000, or $.37 diluted earnings per share, compared with
 $2,051,000, or $.46 diluted earnings per share for the first quarter of 2000.
     Contributing to the decrease in profitability was the decline in net
 interest income as the result of the reduction in the prime rate.  Another
 factor was that the Company recorded a one-time tax benefit of $153,000 in the
 first quarter of 2000 relating to a charitable contribution on the sale of a
 parcel of real estate owned.  When discounting this one-time factor from 2000,
 net income for the first three months of the current year was 12.8 percent
 less than last year.  A third contributing element was the reversing of
 $70,000 in interest on loans to one creditor, as the loans became impaired.
     There was no provision for loan losses for the quarter ending March 31,
 2001 or for the same quarter last year.  Northern States Financial Corporation
 had nonperforming loans at March 31, 2001 of $3,093,000 or 1.04 percent of
 gross loans, a decrease of $1,019,000 from December 31, 2000.  Based on
 management's analysis, the allowance for loan losses at March 31, 2001 of
 $4,112,000, is adequate to cover current loan-loss exposure.
     Northern State's efficiency ratio, noninterest expense divided by the sum
 of net interest income and noninterest income, was 52.03 percent for the first
 quarter of 2001 as compared to 46.65 percent for the same quarter of 2000.  A
 decreasing ratio is preferred.  The decrease in net interest income coupled
 with increases to noninterest expenses for higher energy costs account for
 much of the change in the efficiency ratio.
     The company's total assets were $537 million at March 31, 2001, largely
 unchanged from assets of $538 million at December 31, 2000.  Loans were at
 $297 million at March 31, 2001 decreasing slightly from $299 million at
 year-end.  Real estate construction loans increased $4 million indicating
 continued strength in the local building industry.  Deposits decreased $5
 million as municipal depositors drew down balances for operating purposes
 prior to collection of real estate taxes.
     The board of directors of the Northern States Financial Corporation has
 declared a cash dividend of $.48 per share payable on June 1, 2001 to
 stockholders of record at May 15, 2001.  This is a 2.1% percent increase to
 the semi-annual dividend compared to the December 1, 2000 cash dividend of
 $.47 per share.
     Annualized, this dividend would mark the NINETEENTH consecutive year of
 increases in dividends paid to stockholders and represents a dividend yield of
 approximately 5 percent.
     Northern States Financial Corporation is the holding company for the Bank
 of Waukegan, a full-service commercial bank founded in 1962 with six branches
 in Lake County, Illinois, serving the populations of northeastern Illinois and
 southeastern Wisconsin.
 
                     NORTHERN STATES FINANCIAL CORPORATION
                              KEY PERFORMANCE DATA
                        ($ 000's except per share data)
 
 
     Quarter ended March 31,:           2001            2000      % Change
 
     Net Income                       $1,656          $2,051        -19.3%
     Basic Earnings Per Share          $0.37           $0.46        -19.6%
     Diluted Earnings Per Share        $0.37           $0.46        -19.6%
     Return on Average Assets          1.24%           1.73%        -28.3%
     Return on Average Equity          8.99%          12.53%        -28.3%
     Efficiency Ratio                 52.03%          46.65%
 
                                   March 31,         Dec. 31,
                                      2001             2000         % Change
 
     Total Assets                   $536,653        $538,256         -0.3%
     Gross Loans                     296,837         298,851         -0.7%
     Total Deposits                  368,160         373,121         -1.3%
     Total Stockholders' Equity       75,106          72,439          3.7%
     Nonperforming Loans               3,093           4,112        -24.8%
     Nonperforming Loans to
      Gross Loans                      1.04%           1.38%        -24.6%
 
 
 
                       NORTHERN STATES FINANCIAL CORPORATION
                                  DIVIDEND HISTORY
 
                                      June 1      December 1         Total
 
     1996                              $0.19           $0.21         $0.40
     1997                               0.23            0.25          0.48
     1998                               0.28            0.32          0.60
     1999                               0.35            0.40          0.75
     2000                               0.43            0.47          0.90
     2001                               0.48
 
 
 SOURCE  Northern State Financial Corporation