FOR IMMEDIATE RELEASE

 
| Contact: | Thomas  Stienessen       |
|----------|--------------------------|
|     | Chief  Executive Officer |
|     | (507)  387-2265          |

 

**NORTHERN STAR FINANCIAL, INC. REPORTS**

**FOURTH QUARTER AND YEAR END RESULTS**

** **

MANKATO, Minnesota (November14, 2001) - Northern Star Financial, Inc. (NASDAQ/OTC BB: "NSBK")today announced results for the Company and its wholly owned subsidiaryNorthern Star Bank for the first quarter of the fiscal year ending June 30,2002.

 

Northern StarFinancial, Inc., the parent company of Northern Star Bank, reported a net lossof  $395,805 in the first quarter endedSeptember 30, 2001 compared with a net loss of $45,853 in the first quarter offiscal year 2001.  The Basic loss pershare of $(0.83) for the first quarter of the fiscal year ending June 30, 2002compared with a Basic Loss per share of $ (0.11) during the first quarter ofthe fiscal year ending June 30, 2001.

 

The Company'stotal assets increased to $42.5 million at the end of the first quarter up from$39.1 million for the fiscal year ending June 30, 2001.  Total deposits for the first quarter endedSeptember 30, 2001 increased to $34.6 million up from $32.8 million for thefiscal year ending June 30, 2001. Loan receivables net of allowance for loanlosses increased by $2.0 million over the prior fiscal year end. 

 

Northern StarBank reported that it had completed site work at its banking facility in St.Cloud, Minnesota and began operations there on August 15, 2001.

 

Commenting onthe announcement, Thomas Stienessen, Chief Executive Officer of Northern StarFinancial, Inc. said, " We are delighted that improvements in non-interestincome have off-set our slower growth and narrower net interest margins.  The increase in operating expensesassociated with our expansion into the St. Cloud market have had a near-termadverse effect on operating results however, we remain confident about ourprospects for success there." Stienessen went on to say, " Although the level of ournon-performing loans remain low, we have growing concern about the impact thedeepening recession may have on our consumer and small business loanportfolio.  As a result, we have made asignificant addition to our loan loss reserves."

 

Stienessenalso announced the election of St. Cloud area businessman James Illies to theCompany's Board of Directors at its annual meeting held on October 24, 2001 inMankato, Minnesota.  Re-elected forthree-year terms were Company Chairman Thomas Reynolds and Dean Doyscher whoalso serves as Company Treasurer and Secretary.  Stienessen indicated that the shareholders had also approved anincrease from seven to eight as the number of directors authorized to serve onthe Company's board of directors.          

 

 

 

**Northern Star Financial Summary FinancialData**

 

The following table summarizes certainhistorical financial data of Northern Star Financial, Inc. and its subsidiaryon a consolidated basis as of and for the three months ended September 30, 2001and 2000.  

 
|                                     |   | **For The Three  Months** |       |
|------------------------------------------|--------|---------------------------|------------|
|                                     |   | **Ended  September 30,**  |       |
|                                     |   | **2001**                  |       | **2000** |   |
|                                     |   | **(unaudited)**           |       | **(unaudited)** |   |
| Statement  of Income:                    |   |                      |       |   |   |
| Interest  income                         |   | $                         | 686,788    |   | $ | 542,518 |   |
| Interest  expense                        |   | 507,565                   |       | 329,935 |   |
| Net  interest income                     |   | 179,223                   |       | 212,583 |   |
| Provision  for loan losses               |   | (294,400                  | )          | (20,350 | ) |
| Other  non-interest income               |   | 62,028                    |       | 29,519 |   |
| Non-interest  expense                    |   | (342,656                  | )          | (267,605 | ) |
| Income  (loss) before income tax expense |   | (395,805                  | )          | (45,853 | ) |
| Income  tax expense (benefit)            |   | -                         |       | - |   |
| Net  income (loss)                       |   | $                         | (395,805   | ) | $ | (45,853 | ) |
| Balance  Sheet:                          |   |                      |       |   |   |
| Assets                                   |   | $                         | 42,549,313 |   | $ | 28,259,589 |   |
| Allowance  for loan losses               |   | 528,801                   |       | 201,850 |   |
| Deposits                                 |   | 34,636,513                |       | 22,743,982 |   |
| Stockholders'  equity                    |   | 2,644,401                 |       | 2,765,210 |   |
|                                     |   |                      |       |   |   |
| Per  Share Data:                         |   |                      |       |   |   |
| Net  income (loss) - basic               |   | $                         | (0.83      | ) | $ | (0.11 | ) |
| Net  income (loss) - diluted             |   | $                         | (0.83      | ) | $ | (0.11 | ) |
| Book  value                              |   | 5.51                      |       | 6.47 |   |
|                                     |   |                      |       |   |   |
| Other  Data                              |   |                      |       |   |   |
| Average  shares outstanding - basic      |   | 479,506                   |       | 427,600 |   |
| Average  shares outstanding - diluted    |   | 479,506                   |       | 427,600 |   |

 

THIS PRESS RELEASE CONTAINSFORWARD-LOOKING INFORMATION AND ACTUAL RESULTS MAY DIFFER.

** **

Statements thatNorthern Star Financial may publish, including those in this announcement thatare not strictly historical, are “forward-looking” statements made under thesafe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Statements in this Press Release, includingthose made by Thomas Stienessen, regarding the Company’s beliefs andexpectations that the Company’s expansion into the St. Cloud market will likelyresult in near-term deterioration of operating performance but the longer-term prospectsare excellent and should be evident during the second quarter of fiscal year2002 are “forward-looking” statements.  

 

“Forward-looking”statements involve known and unknown risks and uncertainties that may causeactual results to differ materially from those expected and stated in thisannouncement.  Actual results coulddiffer as a result of: (1) a further slow down of the economy, particularly inthe Mankato and St. Cloud, MN regions, (2) and increase in loan losses beyondthe Company’s reserves; and (3) a material increase in operation expenses, dueto the Company’s expansion into St. Cloud, MN.