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e are pleased to report that our 1998 earnings were the highest in |
the history of the Northern States Financial Corporation. Our earnings
amounted to $7,304,000, an increase of $294,000 or 4.2% over 1997. This resulted in a
basic earnings per share of $1.64, an increase of $.06 over 1997's basic earnings per
share of $1.58. Dividends paid to the stockholders were $.60 per share, an increase of 25%
over 1997, resulting in the sixteenth consecutive year of increased dividends.
Stockholders' equity of the Northern States Financial Corporation was $65,113,000 at 1998
year-end, resulting in a book value of $14.63 per share, $1.09 or 8% higher than last
year.
Our total assets at the close of the year were $485,291,000,
resulting in a tier 1 capital to average assets ratio at year-end 1998 of 13.7%. Total
loans at year-end were $246,209,000, an increase of $3,985,000 over 1997. The allowance
for loan losses was $5,433,000, which is 2.2% of total loans outstanding.
Our non-performing loans at year-end amounted to $4,117,000, an
increase of $3,111,000. The increase is the result of one credit secured by an office
building which we expect to take title to during the first quarter of 1999. We are
negotiating with potential buyers in order to sell this property.
At the annual meeting of stockholders, held April 23, 1998, a
five-for-one stock split of Northern States Financial Corporation stock was approved. We
believe that this stock split has increased the availability of our stock. The split was
done to bring the per share price back in line with companies of similar size and improve
the liquidity of our shares. All earnings and dividend per share information appearing in
this report have been adjusted to reflect the five-for-one stock split.
On April 22, 1998 Northern States Financial Corporation merged
its wholly- owned subsidiaries, Bank of Waukegan and First Federal Bank, fsb, into the
Bank of Waukegan. We believe that this merger has enabled us to streamline our operations
and enhance our service to our customers. With this merger we are able to take advantage
of efficiencies of scale and have less duplication of effort and, as a consequence, we are
able to improve the bottom line. This is evident in our efficiency ratio or overhead ratio
which was 47.6% |
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for 1998. This
ranks us in the upper 25% of area banks for control of expenses.
During 1998 we consolidated one of the former First Federal Bank,
fsb branch offices that was located two city blocks from the main office of the Bank of
Waukegan. A branch office was also purchased in the neighboring community of Winthrop
Harbor, Illinois, which opened on November 30, 1998. The result of these developments is
that the Bank of Waukegan has six full service branches with an expanded geographic
presence in Lake County, Illinois.
As part of the strategic planning process we have established two
corporate goals: Goal One is to be the number one bank in our area for both retail and
commercial customers. By continuing to be an aggressive lender and by providing efficient,
friendly service, we believe our satisfied customers will help us to grow and accomplish
this goal. Goal Two is to continue to achieve a high return on assets and equity. We
are confident that our dedicated officers and employees, together with leadership from our
excellent Board of Directors, will enable us to meet these challenges. The Company's staff
can further improve our financial performance and enhance stockholder investment by
maintaining our theme of "Our Most Important Customer Is You". |
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Sincerely,
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Fred Abdula |
Chairman of the
Board &
Chief Executive Officer |
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