Basis of Presentation

3 Months Ended

Mar. 31, 2012

Note 1 - Basis of Presentation

The accompanying interim condensed consolidated financial statements are prepared without audit and reflect all adjustments which are of a normal and recurring nature and, in the opinion of management, are necessary to present interim financial statements of Northern States Financial Corporation (the "Company") in accordance with accounting principles generally accepted in the United States of America. The interim financial statements do not purport to contain all the necessary financial disclosures covered by accounting principles generally accepted in the United States of America that might otherwise be necessary for complete financial statements.

To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ. Estimates and assumptions used for the allowance for loan and lease losses, valuation of other real estate owned, valuation of other than temporarily impaired securities, valuation of deferred tax assets and status of contingencies are particularly subject to change.

The interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes (or "notes thereto") of the Company for the years ended December 31, 2011 and 2010 included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 as filed with the Securities and Exchange Commission. The results of operations for the three month period ended March 31, 2012 included herein are not necessarily indicative of the results to be expected for the full year 2012.

Net loss available to common stockholders was utilized to calculate loss per share for all periods presented. During the periods presented, the Company had preferred stock and common stock equivalents from warrants related to funds received from the U.S Department of the Treasury (the "Treasury Department") through its Capital Purchase Program. However, common stock equivalents from warrants during the periods presented were antidilutive and, therefore, not considered in computing diluted loss per share.

(Dollars in thousands, except per share data)	Three Months Ended
	March 31,
	2012			2011
Basic earnings per share:
Net loss	$	(2,840	)	$	(1,102	)
Dividends accrued to preferred stockholders		243			230
Accretion of discount on preferred stock		35			34
Net loss available to common stockholders	$	(3,118	)	$	(1,366	)
Weighted average common shares outstanding		4,277,755			4,270,553
Basic loss per share	$	(0.73	)	$	(0.32	)

Diluted earnings per share:
Net loss	$	(2,840	)	$	(1,102	)
Dividends accrued to preferred stockholders		243			230
Accretion of discount on preferred stock		35			34
Net loss available to common stockholders	$	(3,118	)	$	(1,366	)
Weighted average common shares outstanding		4,277,755			4,270,553
Add: Dilutive effect of common stock equivalents		0			0
Weighted average common and dilutive common shares outstanding..		4,277,755			4,270,553
Diluted loss per share	$	(0.73	)	$	(0.32	)

- Definition

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

+ References

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+ Details

NORTHERN STATES FINANCIAL CORP /DE/ 10-Q