NORTHERN STATES FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS

The Company and its subsidiary are subject to regulation by numerous agencies including the Federal Reserve Board, the Federal Deposit Insurance Corporation and the Illinois Office of Banks and Real Estate. Among other things, these agencies limit the activities in which the Company and the Bank may engage, the investments and loans that the Bank funds, and the reserves against deposits which the Bank must maintain. The statements contained in this management’s discussion and analysis that are not historical facts are forward-looking statements subject to the safe harbor created by the Private

Securities Reform Act of 1995. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are identifiable by the use of the words “believe”, “expect”, “intend”, “estimate” or similar expressions. The Company cautions readers of this Annual Report that a number of important factors could cause the Company’s actual results in 2000 and beyond to differ materially from those expressed in any such forward-looking statements.
 
TABLE 1 ANALYSIS OF AVERAGE BALANCES, TAX EQUIVALENT YIELDS AND RATES
 
($ 000S)
For the Years Ended December 31,
   
1999
  
   
1998
   
   
1997
   
Average
Balance
Interest
Rate
Average
Balance
Interest
Rate
Average
Balance
Interest
Rate
ASSETS
Loans (1) (2) (3)
$244,039
$20,896
8.56%
$242,020
$21,903
9.05%
$241,019
$22,343
9.27%
Taxable securities (5)
175,146
10,663
6.00
167,117
10,263
6.16
132,128
8,411
6.34
Securities exempt from
     federal income taxes (2) (5)
20,754
1,568
7.68
19,552
1,543
8.18
21,301
1,741
8.38
Interest bearing deposits
     in financial institutions
296
16
5.41
428
25
5.84
617
35
5.67
Federal funds sold
6,171
298
4.83
21,157
1,135
5.36
17,437
965
5.53
     Interest earning assets
446,406
33,441
7.46
450,274
34,869
7.76
412,502
33,495
8.12
Noninterest earning assets
26,293
20,823
22,344
     Average assets (4)
$472,699
$471,097
$434,846
Liabilities and
     stockholders' equity
NOW deposits
$46,403
1,204
2.59
$39,310
1,157
2.94
$37,672
1,120
2.97
Money market deposits
40,557
1,416
3.49
42,400
1,656
3.91
41,945
1,672
3.99
Savings deposits
45,553
1,275
2.80
44,067
1,311
2.98
44,458
1,322
2.97
Time deposits
169,901
8,526
5.02
188,365
10,413
5.53
171,149
9,714
5.68
Other borrowings
54,852
2,584
4.71
45,582
2,359
5.18
35,082
1,787
5.09
     Interest bearing liabilities
357,266
15,005
4.20
359,724
16,896
4.70
330,306
15,615
4.73
Demand deposits
43,128
40,254
40,112
Other noninterest
     bearing liabilities
6,886
8,500
7,341
Stockholders' equity
65,419
62,619
57,087
     Average liabilities and
         stockholders' equity
$472,699
$471,097
$434,846
     Net interest income
$18,436
$17,973
$17,880
     Net yield on interest
          earning assets
4.11%
3.99%
4.33%
     Interest bearing liabilities
          to earning assets ratio
80.03%
79.89%
80.07%
(1) - Interest income on loans includes loan origination and other fees of $353 for 1999, $475 for 1998 and $492 for 1997. Average loans include direct lease financing.
(2) - Tax-exempt income is reflected on a fully tax equivalent basis utilizing a 34% rate.
(3) - Non-accrual loans are included in average loans.
(4) - Average balances are derived from the average daily balances.
(5) - Rate information was calculated based on the average amortized cost for securities. The 1999, 1998, and 1997, average balance information includes an average unrealized gain (loss) for taxable securities of $(2,425), $397 and $(526). The 1999, 1998, and 1997 average balance information includes an average unrealized gain (loss) of $344, $682, and $530 for tax-exempt securities.
NSFC ANNUAL REPORT 1999   15