SOURCE: Princeton National Bancorp, Inc.

Princeton National Bancorp, Inc.

April 12, 2012 17:00 ET

Princeton National Bancorp, Inc. Releases 2011 Results

PRINCETON, IL--(Marketwire - Apr 12, 2012) - Princeton National Bancorp, Inc. (the "Corporation" or "PNBC") (NASDAQ: PNBC), parent corporation of Citizens First National Bank (the "Bank"), ended the year with a net loss available to common stockholders of $55.6 million, or $(16.71) per common share on a fully diluted basis. The Corporation recorded loan loss provision of $51.8 million in 2011 to resolve problem loan assets that are materially impacting the Corporation's wholly-owned subsidiary, Citizens First National Bank. At the end of 2010 and throughout 2011, a credit administration division was created at the Bank to help proactively identify and address the Bank's loan portfolio challenges, and help pave the way for a return to a more normal loan loss provision level.

Net income available to common stockholders, on a pre-tax, pre-provision basis, was $4.1 million at year-end 2011 compared to $10.4 million at year-end 2010. This decline is due to an increase in loan collection expenses and continuing write-downs of assets placed in other real estate owned.

The net interest margin for 2011 was a strong 4.08%, as compared to 3.98% for 2010. The Bank was able to increase the net interest margin during 2011 despite the impact of a decrease in loans from the lack of sufficient quality loan demand and the historically low interest rate environment.

Non-interest income grew to $12.6 million in 2011, from $11.5 million in 2010. In 2011, non-interest income was positively impacted by increased gains from the sales of securities, an increase in service charges on deposits, and negatively impacted by a mortgage impairment write-down of $1,017,000.

Net loan charge-offs grew from $22.9 million in 2010 to $51.1 million in 2011 due to a proactive charge-off stance, which was the result of the Bank's focus on problem loan identification and resolution. We anticipate that these aggressive tactics will assist in stabilizing the Bank's charge-offs with the goal to have them decline significantly.

Total assets at December 31, 2011 decreased to $1.014 billion from $1.096 billion at December 31, 2010. Total net loan balances decreased by $83.7 million during the twelve month period to $590.6 million due to seasonal pay downs in the agricultural portfolio, non-performing loans being transferred into OREO, and a general decline in the overall demand for new low-risk credit. Deposits totaled $917.3 million, down from $963.0 million in 2010, reflecting managed efforts to reduce deposit levels to positively impact capital ratios. The Bank benefitted from a very low cost of funds in 2011, while maintaining consistent funding levels and increased levels of liquidity. The balance sheet reduction strategy did not impact the Bank's core customer base and was managed via slightly lower CD rates and high-yield money market rates, while seizing appropriate opportunities to lower higher cost public and non-public deposits.

Stockholders' equity was $4.9 million at year-end 2011, compared to $56.9 million in 2010. At December 31, 2011, the Bank's tier-one leverage, tier one and total risk-based capital ratios were 2.14%, 3.31% and 4.60%, respectively.

The Bank continues to operate under a Consent Order entered into on September 20, 2011 with the Office of the Comptroller of the Currency, its principal regulator. Actions have been implemented to ensure that an adequate loan loss allowance and workout plan for substandard loans is maintained and to improve the loan risk rating system.

The Corporation entered into a Written Agreement with the Federal Reserve Bank, which included similar items as the OCC Consent Order, on October 27, 2011 and is taking steps to fully comply with the requirements in that agreement.

The Corporation offers stockholders the opportunity to participate in the Princeton National Bancorp, Inc. Dividend Reinvestment and Stock Purchase Plan, which allows for optional cash contributions to purchase stock. To obtain information about the stock purchase plan, please contact us at 815-872-6131.

Princeton National Bancorp, Inc.'s Web Address: www.pnbc-inc.com.

FORWARD-LOOKING INFORMATION:

This press release may contain certain forward-looking statements, including certain plans, revenues, earnings, 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 "believe," "anticipate," "estimate," "expect," "intend," "plan," "project" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may."

Forward-looking statements by their very nature are subject to risks and uncertainties. A number of factors, many of which are beyond the Corporation's control, could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. The Corporation's most recent reports filed with the Securities and Exchange Commission describe some of these factors, including certain credit, market, operational, liquidity and interest rate risks associated with the Corporation's business and operations. Other factors described in these reports include changes in business and economic conditions, competition, fiscal and monetary policies, disintermediation, legislation including the Sarbanes-Oxley Act of 2002 and the Gramm-Leach-Bliley Act of 1999, and mergers and acquisitions.

Forward-looking statements speak only as of the date they are made. The Corporation does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date forward-looking statements are made.

CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data) December 31, December 31,
2011 2010
(unaudited)
ASSETS
Cash and due from banks $ 16,307 $ 12,992
Interest-bearing deposits with financial institutions 46,988 30,888
Total cash and cash equivalents 63,295 43,880
Loans held for sale, at lower of cost or market 2,220 5,515
Investment securities available-for-sale, at fair value 251,747 248,752
Investment securities held-to-maturity, at amortized cost 9,836 12,187
Total investment securities 261,583 260,939
Loans, net of unearned interest 621,021 704,074
Allowance for loan losses (30,413 ) (29,726 )
Net loans 590,608 674,348
Premises and equipment, net 25,850 26,901
Land held for sale, at lower of cost or market 2,164 2,244
Federal Reserve and Federal Home Loan Bank stock 4,500 4,498
Bank-owned life insurance 24,330 23,416
Interest receivable 6,453 7,482
Deferred income taxes 0 10,512
Intangible assets, net of accumulated amortization 1,877 2,531
Other real estate owned 21,848 20,652
Other assets 9,588 13,553
TOTAL ASSETS $ 1,014,316 $ 1,096,471
LIABILITIES
Demand deposits $ 171,939 $ 138,683
Interest-bearing demand deposits 353,462 383,126
Savings deposits 84,599 74,817
Time deposits 307,295 366,335
Total deposits 917,295 962,961
Customer repurchase agreements 54,835 35,806
Advances from the Federal Home Loan Bank 5,000 9,000
Interest-bearing demand notes issued to the U.S. Treasury 0 1,753
Trust Preferred securities 25,000 25,000
Total borrowings 84,835 71,559
Other liabilities 7,251 5,090
Total liabilities 1,009,381 1,039,610
STOCKHOLDERS' EQUITY
Preferred stock 25,016 24,986
Common stock 22,391 22,391
Common stock warrants 150 150
Additional paid-in capital 18,126 18,275
Retained earnings (deficit) (42,791 ) 11,589
Accumulated other comprehensive income (loss), net of tax 5,378 3,064
Less: Treasury stock (23,335 ) (23,594 )
Total stockholders' equity 4,935 56,861
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,014,316 $ 1,096,471
CAPITAL STATISTICS (UNAUDITED)
YTD average equity to average assets 4.80 % 6.62 %
Tier 1 leverage capital ratio -0.32 % 5.93 %
Tier 1 risk-based capital ratio -0.50 % 8.40 %
Total risk-based capital ratio -0.50 % 9.68 %
Common book value per share $ (6.01 ) $ 9.58
Closing market price per share $ 1.51 $ 3.64
End of period shares outstanding 3,341,029 3,325,941
End of period treasury shares outstanding 1,137,266 1,152,354
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share data)
THREE MONTHS THREE MONTHS TWELVE MONTHS TWELVE MONTHS
ENDED ENDED ENDED ENDED
December 31, 2011 December 31, 2010 December 31, 2011 December 31, 2010
(unaudited) (unaudited) (unaudited) (unaudited)
INTEREST INCOME
Interest and fees on loans $ 7,478 $ 9,251 $ 32,397 $ 39,310
Interest and dividends on investment securities 2,101 2,403 9,042 10,117
Interest on interest-bearing time deposits in other banks 42 36 136 139
Total Interest Income 9,621 11,690 41,575 49,566
INTEREST EXPENSE
Interest on deposits 1,190 2,038 6,085 10,385
Interest on borrowings 224 237 804 1,853
Total Interest Expense 1,414 2,275 6,889 12,238
Net interest income 8,207 9,415 34,686 37,328
Provision for loan losses 33,903 27,250 51,803 40,550
Net interest income after provision (25,696 ) (17,835 ) (17,117 ) (3,222 )
NON-INTEREST INCOME
Trust & farm management fees 259 298 1,073 1,148
Service charges on deposit accounts 1,005 914 4,033 3,969
Other service charges 402 392 1,674 1,593
Gain on sales of securities available-for-sale 0 0 2,693 722
Brokerage fee income 190 207 684 754
Mortgage servicing rights recovery (impairment) (200 ) 812 (1,017 ) (110 )
Mortgage banking income 792 926 2,104 2,383
Bank-owned life insurance income 227 227 904 910
Other operating income 195 22 438 123
Total Non-Interest Income 2,870 3,798 12,586 11,492
NON-INTEREST EXPENSE
Salaries and employee benefits 4,583 4,717 18,388 18,211
Occupancy 672 657 2,661 2,635
Equipment expense 749 821 3,065 3,117
Federal insurance assessments 945 683 2,714 2,519
Intangible assets amortization 144 203 657 808
Data processing 313 340 1,330 1,327
Marketing 161 160 605 696
ORE Expenses, net 1,131 1,018 3,998 2,586
Loan collection expenses 2,030 199 3,127 691
Write-down of land held-for-sale 80 0 80 110
Other operating expense 1,366 1,207 5,307 4,453
Total Non-Interest Expense 12,174 10,005 41,932 37,153
Loss before income taxes (35,000 ) (24,042 ) (46,463 ) (28,883 )
Income tax expense (benefit) (665 ) (8,295 ) 7,887 (11,904 )
Net loss (34,335 ) (15,747 ) (54,350 ) (16,979 )
Preferred stock dividends 0 314 0 1,255
Dividends in arrears on preferred stock 314 0 1,254 0
Accretion of preferred stock discount 7 7 30 28
Net loss available to common stockholders $ (34,656 ) $ (16,068 ) $ (55,634 ) $ (18,262 )
Net loss per share available to common stockholders:
BASIC $ (10.39 ) $ (4.85 ) $ (16.71 ) $ (5.52 )
DILUTED $ (10.39 ) $ (4.85 ) $ (16.71 ) $ (5.52 )
Basic weighted average shares outstanding 3,333,968 3,315,512 3,329,523 3,311,291
Diluted weighted average shares outstanding 3,333,968 3,315,512 3,329,523 3,311,291
PERFORMANCE RATIOS (annualized)
Net Income (Loss) Available to Common Stockholders to Average Assets -12.96 % -5.67 % -5.15 % -1.58 %
Net Income (Loss) Available to Common Stockholders to Average Equity -384.69 % -84.88 % -107.44 % -23.82 %
Net interest margin (tax-equivalent) 3.87 % 4.16 % 4.08 % 3.98 %
Efficiency ratio (tax-equivalent) 106.53 % 72.85 % 85.74 % 72.93 %
ASSET QUALITY
Net loan charge-offs $ 20,001 $ 16,076 $ 51,115 $ 22,947
Total non-performing loans (non-accrual, past due over 90 days, troubled debt restructuring) $ 100,979 $ 97,351 $ 100,979 $ 97,351
Non-performing loans as a % of total loans 16.26 % 13.83 % 16.26 % 13.83 %

Contact Information

  • Inquiries should be directed to:
    Lou Ann Birkey
    Vice President - Investor Relations
    Princeton National Bancorp, Inc.
    (815) 872-6131
    E-Mail address: Email Contact