SOURCE: Princeton National Bancorp, Inc.

October 23, 2007 12:21 ET

Princeton National Bancorp, Inc. Increases Earnings per Share 13.0%

PRINCETON, IL--(Marketwire - October 23, 2007) - Princeton National Bancorp, Inc. (NASDAQ: PNBC) reported third quarter fully diluted earnings per share increased 13.0% to $.52 from $.46 in the second quarter of 2007 and 10.6% from the third quarter of 2006. Third quarter net income increased 12.1% to $1,740,354 from $1,552,810 in the second quarter and 8.3% from $1,607,414 in the third quarter of 2006.

"The results for the third quarter were very encouraging," said Tony J. Sorcic, President and Chief Executive Officer. "The net interest margin increased 8 basis points from the second quarter, non-interest income increased 7.8%, and the return on average equity increased 11.4%. Based on the September 30th level of interest-earning assets, the improvement in the net interest margin equates to an increase in net (annualized pre-tax) interest income of $747,000. Management believes the net interest margin will continue to improve during the remainder of the year; however, if there is another prime rate decrease in the fourth quarter, the net interest margin will again be under pressure."

Non-interest income for the quarter was $2,935,000. As stated above, this represents a 7.8% increase from the second quarter and a 14.5% increase from the third quarter of 2006. The Company's non-interest income has equaled or exceeded 1% of average assets for 29 consecutive quarters. Non-interest income growth continues to be an integral component of the Company's success.

As a percentage of average assets, non-interest expense was 2.85% for the third quarter, a decrease from 2.88% for the second quarter. The non-interest expense as a percentage of average assets for the nine months ending September 30, 2007 was 2.87%. Operating expenses are well-controlled and emphasis will continue to be placed on improving efficiencies. The last time the Company was at this level for an entire year was 1993.

Significant improvement has been seen in the return on average equity in 2007. The first quarter return on average equity was 8.80%, and increased to 9.56% in the second quarter and 10.65% in the third quarter. Continued improvement in the return on average equity is anticipated in the fourth quarter.

When comparing the first nine months of 2007 to the same period in 2006, non-interest income of $8,302,000 increased 7.6% and net interest income of $19,829,000 increased 2.4%, while net income decreased 2.4% to $4,723,000 and fully diluted earnings per share decreased 1.4% to $1.41.

Assets at September 30, 2007 were $1.060 billion, representing growth of $28.1 million, or 2.7%, since December 31, 2006. During the first nine months of 2007, total loans increased $60.8 million, ending the quarter at $690,228,000. The loan-to-asset ratio increased to 65.1% at September 30, 2007 from 61.0% at December 31, 2006, and was as high as 67.3% during the quarter. The decision of the Subsidiary Bank to fund loans with maturities from the investment portfolio, rather than exclusively through deposit growth, has had a positive impact on the net interest margin. The investment portfolio has decreased $45.3 million since year-end 2006. The Subsidiary Bank currently has $71.3 million in its commercial banking pipeline, which, if funded, should help fuel continued improvement in the net interest margin. The non-performing loans represent 0.93% of the total loan portfolio at September 30, 2007. The Subsidiary Bank has no sub-prime loans in the loan portfolio.

The Company ended the third quarter of 2007 with total deposits and repurchase agreements of $935.6 million, a $22.4 million increase from $913.2 million at December 31, 2006. As stated in previous reports, the increase occurred primarily in checking, time deposit, repurchase agreements and money market accounts.

The banking environment has shown significant improvement, although the net interest margin continues to be below historical levels. Our priorities in the fourth quarter will be: continuing the growth trend in the loan portfolio; increasing non-interest income; attracting core deposits (especially non-interest bearing deposits); and improving earnings per share. Management is focused on building franchise value through the execution of the Company's strategy. The staff of the Subsidiary Bank is committed to being the best community bank in each of the markets served. Additional financial information is available at www.pnbc-inc.com.

The Company has not purchased any shares under the 50,000 share Stock Repurchase Plan which was announced on April 24, 2007. The Company currently has 3,316,224 outstanding shares of common stock. Since 1997, the Company has repurchased a total of 1,334,271 shares through stock repurchase programs.

The Company offers shareholders the opportunity to participate in the Princeton National Bancorp, Inc. Dividend Reinvestment and Stock Purchase Plan. The Company also offers electronic direct deposit of dividends. To obtain information about the stock purchase plan or electronic direct deposit, please contact us at 815-875-4445, extension 650.

Princeton National Bancorp, Inc. is the parent holding company of Citizens First National Bank, a $1.060 billion community bank with strategic locations in 8 counties in northern Illinois. The Company is well-positioned in the high growth counties of Will, Kendall, Kane, Grundy, DeKalb and LaSalle plus Bureau and Marshall. Communities include: Aurora, DePue, Genoa, Hampshire, Henry, Huntley, Millbrook, Minooka, Newark, Oglesby, Peru, Plainfield, Plano, Princeton, Sandwich, Somonauk and Spring Valley. The Subsidiary Bank, Citizens First National Bank, provides financial services to meet the needs of individuals, businesses and public entities.

This press release contains certain forward-looking statements, including certain plans, expectations, goals, and projections, which are subject to numerous assumptions, risks, and uncertainties. These forward-looking statements are identified by the use of words such as 1) believes, 2) anticipates, 3) estimates, 4) expects, 5) projects or similar words. Actual results could differ materially from those contained or implied by such statements for a variety of factors including: changes in economic conditions; movements in interest rates; competitive pressures on product pricing and services; success and timing of business strategies; the nature, extent, and timing of governmental actions and reforms; and extended disruption of vital infrastructure. The figures included in this press release are unaudited and may vary from the audited results.


CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
                                                   September    December
                                                   30, 2007     31, 2006
                                                  (unaudited)
                                                  -----------  -----------
ASSETS

Cash and due from banks                           $    23,398  $    33,882
Interest-bearing deposits with financial
 institutions                                           8,423          103
Federal funds sold                                     17,700        5,200
                                                  -----------  -----------
     Total cash and cash equivalents                   49,521       39,185

Loans held for sale, at lower of cost or market           939        4,512

Investment securities available-for-sale, at fair
 value                                                206,682      252,467
Investment securities held-to-maturity, at
 amortized cost                                        15,973       15,449
                                                  -----------  -----------
     Total investment securities                      222,655      267,916

Loans, net of unearned interest                       690,228      629,472
Allowance for loan losses                              (3,221)      (3,053)
                                                  -----------  -----------
     Net loans                                        687,007      626,419

Premises and equipment, net                            32,638       28,670
Bank-owned life insurance                              22,324       21,470
Interest receivable                                    10,575       11,139
Goodwill, net of accumulated amortization              24,521       23,029
Intangible assets, net of accumulated
 amortization                                           5,317        5,921
Other real estate owned                                   701            0
Other assets                                            3,895        3,698
                                                  -----------  -----------

     TOTAL ASSETS                                 $ 1,060,093  $ 1,031,959
                                                  ===========  ===========



LIABILITIES

Demand deposits                                   $    91,186  $   107,834
Interest-bearing demand deposits                      258,911      231,953
Savings deposits                                      115,410      116,246
Time deposits                                         436,111      425,866
                                                  -----------  -----------
     Total deposits                                   901,618      881,899

Customer repurchase agreements                         33,978       31,344
Advances from the Federal Home Loan Bank                6,980        6,970
Interest-bearing demand notes issued to the U.S.
 Treasury                                               2,387        2,333
Federal funds purchased                                     0            0
Trust Preferred securities                             25,000       25,000
Note payable                                           13,050        8,500
                                                  -----------  -----------

     Total borrowings                                  81,395       74,147

Other liabilities                                      10,532       10,558
                                                  -----------  -----------
     Total liabilities                                993,545      966,604
                                                  -----------  -----------

STOCKHOLDERS' EQUITY

Common stock                                           22,391       22,391
Surplus                                                18,246       18,158
Retained earnings                                      50,126       48,109
Accumulated other comprehensive loss, net of tax         (750)        (960)
Less:  Treasury stock                                 (23,465)     (22,343)
                                                  -----------  -----------
     Total stockholders' equity                        66,548       65,355
                                                  -----------  -----------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY          $ 1,060,093  $ 1,031,959
                                                  ===========  ===========


CAPITAL STATISTICS  (UNAUDITED)

YTD average equity to average assets                     6.35%        6.70%
Tier 1 leverage capital ratio                            6.23%        6.33%
Tier 1 risk-based capital ratio                          8.19%        8.75%
Total risk-based capital ratio                           8.61%        9.18%
Book value per share                              $     20.07  $     19.50
Closing market price per share                    $     26.18  $     32.55
End of period shares outstanding                    3,316,224    3,351,410
End of period treasury shares outstanding           1,162,071    1,126,885



CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share data)

                      THREE MONTHS  THREE MONTHS  NINE MONTHS  NINE MONTHS
                          ENDED         ENDED        ENDED        ENDED
                        September     September    September    September
                        30, 2007      30, 2006      30, 2007     30, 2006
                      (unaudited)   (unaudited)   (unaudited)  (unaudited)
                      ------------  ------------  -----------  -----------

INTEREST INCOME

Interest and fees on
 loans                $     12,980  $     10,714  $    36,880  $    30,559
Interest and
 dividends on
 investment
 securities                  2,619         2,767        8,472        7,905
Interest on federal
 funds sold                     24           206          246          357
Interest on
 interest-bearing
 time deposits in
 other banks                     9            59           85           77
                      ------------  ------------  -----------  -----------
     Total Interest
      Income                15,632        13,746       45,683       38,898
                      ------------  ------------  -----------  -----------

INTEREST EXPENSE

Interest on deposits         7,677         6,397       22,777       16,736
Interest on
 borrowings                  1,105           961        3,077        2,791
                      ------------  ------------  -----------  -----------
     Total Interest
      Expense                8,782         7,358       25,854       19,527
                      ------------  ------------  -----------  -----------

Net interest income          6,850         6,388       19,829       19,371
Provision for loan
 losses                        250            80          550          175
                      ------------  ------------  -----------  -----------

Net interest income
 after provision             6,600         6,308       19,279       19,196
                      ------------  ------------  -----------  -----------

NON-INTEREST INCOME
Trust & farm
 management fees               353           300        1,124        1,158
Service charges on
 deposit accounts            1,174         1,065        3,259        3,166
Other service charges          535           501        1,492        1,336
Gain on sales of
 securities
 available-for-sale            149            98          358          158
Gain on sale of loans            0             0            0           90
Brokerage fee income           224           201          641          563
Mortgage banking
 income                        257           149          666          536
Bank-owned life
 insurance                     203           205          608          581
Other operating
 income                         40            45          154          125
                      ------------  ------------  -----------  -----------
     Total
      Non-Interest
      Income                 2,935         2,564        8,302        7,713
                      ------------  ------------  -----------  -----------

NON-INTEREST EXPENSE
Salaries and employee
 benefits                    4,257         3,936       12,574       11,944
Occupancy                      569           523        1,770        1,458
Equipment expense              756           717        2,371        2,138
Federal insurance
 assessments                    84            78          254          236
Intangible assets
 amortization                  177           163          528          488
Data processing                268           194          797          781
Advertising                    188           220          539          634
Other operating
 expense                     1,088         1,135        3,219        3,525
                      ------------  ------------  -----------  -----------
     Total
      Non-Interest
      Expense                7,387         6,966       22,052       21,204
                      ------------  ------------  -----------  -----------

Income before income
 taxes                       2,148         1,906        5,529        5,705
Income tax expense             408           299          806          867
                      ------------  ------------  -----------  -----------

Net income            $      1,740  $      1,607  $     4,723  $     4,838
                      ============  ============  ===========  ===========



Net income per share:
     BASIC            $       0.53  $       0.48  $      1.42  $      1.43
     DILUTED          $       0.52  $       0.47  $      1.41  $      1.43

Basic weighted
 average shares
 outstanding             3,314,913     3,372,188    3,331,852    3,372,780
Diluted weighted
 average shares
 outstanding             3,322,292     3,393,341    3,342,689    3,394,517


PERFORMANCE RATIOS
 (annualized)

Return on average
 assets                       0.67%         0.66%        0.61%        0.69%
Return on average
 equity                      10.65%         9.90%        9.67%       10.12%
Net interest margin
 (tax-equivalent)             3.23%         3.23%        3.17%        3.39%
Efficiency ratio
 (tax-equivalent)            71.45%        72.86%       73.80%       73.27%


ASSET QUALITY

Net loan charge-offs  $        139  $         (4) $       382  $       201
Total non-performing
 loans                $      6,408  $      4,125  $     6,408  $     4,125
Non-performing loans
 as a % of total
 loans                        0.93%         0.70%        0.93%        0.70%


Contact Information

  • Inquiries should be directed to:
    Lou Ann Birkey
    Vice President - Investor Relations,
    Princeton National Bancorp, Inc.
    (815) 875-4444,
    E-Mail address: Email Contact