SOURCE: Princeton National Bancorp, Inc.

Princeton National Bancorp, Inc.

May 06, 2011 15:45 ET

Princeton National Bancorp, Inc. Releases First Quarter 2011 Results

PRINCETON, IL--(Marketwire - May 6, 2011) - Princeton National Bancorp, Inc. ("PNBC" or "the Corporation") (NASDAQ: PNBC) announced net income of $1.735 million for the first quarter of 2011 as a result of a continued strong net interest margin and lower provision requirements for loan losses. Net income available to common shareholders (net income less the accretion of the preferred stock discount) was $1.728 million, or $.52 per common share available to common shareholders.

"The biggest driver of earnings is the level of loan loss reserves needed on a quarter by quarter basis," said Thomas Ogaard, President & C.E.O. "Our recognition of problem loans in the prior two quarters had a direct impact on the improved results for the first quarter of 2011. The loan loss provision for the quarter was $1.875 million, compared to $27.250 million in the fourth quarter of 2010 and $3.925 million for the first quarter of 2010. While we believe the rate of deterioration in our loan portfolio is beginning to level off, we anticipate there being additional provision expense in 2011, but not to the extent of the last two years, and additional charged off loans," continued Ogaard.

Net loan charge-offs during the first quarter totaled $1.694 million; a decline from $16.1 million in the fourth quarter of 2010. Other real estate owned as of March 31, 2011 totaled $20.6 million, unchanged from year-end 2010. The Corporation is very cognizant of the credit and repayment issues which have resulted from the current economic conditions; as a result, we have continued to increase our provision for loan losses, maintaining the current reserves at 4.34% of total loans, up from 4.22% at year-end 2010. As of March 31, 2011, the balance in the allowance for loan losses totaled $29.9 million and there were specific loss provisions for individual credits totaling $19.6 million, compared to $29.7 million and $12.2 million, respectively, at December 31, 2010. The Subsidiary Bank evaluates many risk factors within the loan portfolio on a monthly basis and considers the allowance for loan losses adequate to meet probable losses as of March 31, 2011.

"Our net interest margin continues to remain robust and is the key contributor to our ability to generate positive results," noted Ogaard. "The net interest margin for the first quarter was 4.42%, an increase of 26 and 52 basis points, respectively, from the fourth and first quarters of 2010. This reflects our ability to drive revenue at a level sufficient to offset expenses."

Total interest income did show a decline of 16.1% to $11.3 million when comparing the first quarter of 2011 to the same period in 2010; however, total interest expense declined by 51.3% to $1.9 million during the same period. The resulting net interest income of $9.4 million represents a minimal decrease of only 1.3% versus the same period in 2010. However, this was achieved with average interest-earning assets being $157.5 million lower over the comparable periods. During the first quarter of 2011, the reduction in interest expense continued to be a major focus in conjunction with the planned reduction in assets. PNBC was able to continue to capitalize on opportunities to lower interest expense, reducing the cost of interest bearing liabilities 71 basis points from 1.59% to .88%, when comparing the first quarters of 2010 and 2011, respectively.

Non-interest income increased to $3.6 million in the first quarter of 2011 from $3.2 million during the first quarter of 2010. During the quarter, the Corporation restructured a portion of its investment portfolio to reduce the level of municipal bonds and reposition mortgage backed securities to enhance future portfolio liquidity. As a result of the steps taken to improve the quality of the investment portfolio and enhance liquidity, security gains of $1.1 million were generated in the first quarter of 2011, compared to $642,000 in the first quarter of 2010.

Non-interest expense totaled $9.4 million, up slightly from $9.3 million during the first quarter of 2010. When comparing the two quarters, negatively impacting other expenses were salary and insurance expenses.

Stockholders' equity was $57.7 million at March 31, 2011, up from $56.9 million at December 31, 2010, resulting in a tier one capital ratio of 6.19% for the first quarter of 2011 and a risk based regulatory capital ratio of 10.01%.

The Corporation ended the first quarter of 2011 with total assets of $1.081 billion, a decrease of $15.7 million (1.4%) from year-end 2010. Additionally, total deposits decreased $12.3 million to $950.7 million from year-end 2010.

The price of PNBC stock closed at $5.39 on March 31, 2011, compared to $3.64 on December 31, 2010. While we believe the level of credit-related costs will begin to decline to more historical levels in 2011, which will positively impact operating results, the community bank stock prices continue to be negatively impacted by earnings due to credit related costs.

The Corporation maintains its focus on ensuring adequate controls are in place to comply with disclosure and financial certification requirements as well as fairly disclosing all aspects of its business in a timely and appropriate fashion.

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 audited results.

CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)          March 31,   December 31,
                                                      2011         2010
                                                  (unaudited)
                                                  -----------  -----------
ASSETS

Cash and due from banks                           $    15,059  $    12,992
Interest-bearing deposits with financial
 institutions                                          41,152       30,888
                                                  -----------  -----------
     Total cash and cash equivalents                   56,211       43,880

Loans held for sale, at lower of cost or market         3,240        5,515

Investment securities available-for-sale, at fair
 value                                                242,452      248,752
Investment securities held-to-maturity, at
 amortized cost                                        11,425       12,187
                                                  -----------  -----------
     Total investment securities                      253,877      260,939

Loans, net of unearned interest                       688,313      704,074
Allowance for loan losses                             (29,907)     (29,726)
                                                  -----------  -----------
     Net loans                                        658,406      674,348

Premises and equipment, net                            26,576       26,901
Land held for sale, at lower of cost or market          2,244        2,244
Federal Reserve and Federal Home Loan Bank stock        4,498        4,498
Bank-owned life insurance                              23,646       23,416
Interest receivable                                     6,159        7,482
Deferred income taxes                                  11,817       10,512
Intangible assets, net of accumulated
 amortization                                           2,337        2,531
Other real estate owned                                20,572       20,652
Other assets                                           11,151       13,553
                                                  -----------  -----------

     TOTAL ASSETS                                 $ 1,080,734  $ 1,096,471
                                                  ===========  ===========

                                                  -----------  -----------

LIABILITIES

Demand deposits                                   $   135,210  $   138,683
Interest-bearing demand deposits                      379,584      383,126
Savings deposits                                       83,191       74,817
Time deposits                                         352,682      366,335
                                                  -----------  -----------
     Total deposits                                   950,667      962,961

Customer repurchase agreements                         35,666       35,806
Advances from the Federal Home Loan Bank                5,000        9,000
Interest-bearing demand notes issued to the U.S.
 Treasury                                               1,064        1,753
Trust Preferred securities                             25,000       25,000
                                                  -----------  -----------
     Total borrowings                                  66,730       71,559

Other liabilities                                       5,671        5,090
                                                  -----------  -----------
     Total liabilities                              1,023,068    1,039,610
                                                  -----------  -----------

STOCKHOLDERS' EQUITY

Preferred stock                                        24,993       24,986
Common stock                                           22,391       22,391
Common stock warrants                                     150          150
Additional paid-in capital                             18,279       18,275
Retained earnings                                      13,317       11,589
Accumulated other comprehensive income (loss),
 net of tax                                             2,095        3,064
Less:  Treasury stock                                 (23,559)     (23,594)
                                                  -----------  -----------
     Total stockholders' equity                        57,666       56,861
                                                  -----------  -----------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY          $ 1,080,734  $ 1,096,471
                                                  ===========  ===========


CAPITAL STATISTICS  (UNAUDITED)

YTD average equity to average assets                     5.26%        6.62%
Tier 1 leverage capital ratio                            6.19%        5.76%
Tier 1 risk-based capital ratio                          8.73%        8.40%
Total risk-based capital ratio                          10.01%        9.68%
Common book value per share                       $      9.72  $      9.58
Closing market price per share                    $      5.39  $      3.64
End of period shares outstanding                    3,328,013    3,325,941
End of period treasury shares outstanding           1,150,282    1,152,354




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

                                                 THREE MONTHS  THREE MONTHS
                                                     ENDED        ENDED
                                                   March 31,    March 31,
                                                      2011         2010
                                                  (unaudited)  (unaudited)
                                                  -----------  -----------

INTEREST INCOME

Interest and fees on loans                        $     8,859  $    10,585
Interest and dividends on investment securities         2,414        2,843
Interest on interest-bearing time deposits in
 other banks                                               21           32
                                                  -----------  -----------
     Total Interest Income                             11,294       13,460
                                                  -----------  -----------

INTEREST EXPENSE

Interest on deposits                                    1,738        3,372
Interest on borrowings                                    199          605
                                                  -----------  -----------
     Total Interest Expense                             1,937        3,977
                                                  -----------  -----------

Net interest income                                     9,357        9,483
Provision for loan losses                               1,875        3,925
                                                  -----------  -----------

Net interest income after provision                     7,482        5,558
                                                  -----------  -----------

NON-INTEREST INCOME
Trust & farm management fees                              290          264
Service charges on deposit accounts                       943          891
Other service charges                                     405          459
Gain on sales of securities available-for-sale          1,084          642
Brokerage fee income                                      139          189
Mortgage servicing rights recovery (impairment)             0            0
Mortgage banking income                                   451          496
Bank-owned life insurance income                          221          229
Other operating income                                     67           22
                                                  -----------  -----------
     Total Non-Interest Income                          3,600        3,192
                                                  -----------  -----------

NON-INTEREST EXPENSE
Salaries and employee benefits                          4,616        4,413
Occupancy                                                 689          700
Equipment expense                                         781          767
Federal insurance assessments                             640          698
Intangible assets amortization                            194          201
Data processing                                           366          312
Advertising                                               155          176
ORE Expenses, net                                         582          735
Loan collection expenses                                  163          205
Other operating expense                                 1,249        1,079
                                                  -----------  -----------
     Total Non-Interest Expense                         9,435        9,286
                                                  -----------  -----------

Income before income taxes                              1,647         (536)
Income tax expense                                        (88)        (795)
                                                  -----------  -----------

Net income                                              1,735          259

Preferred stock dividends                                   0          314
Accretion of preferred stock discount                       7            7
                                                  -----------  -----------

Net income available to common stockholders       $     1,728  ($       62)
                                                  ===========  ===========

Net income (loss) per share available to common
 stockholders:
     BASIC                                        $      0.52  ($     0.02)
     DILUTED                                      $      0.52  ($     0.02)

Basic weighted average shares outstanding           3,325,964    3,306,762
Diluted weighted average shares outstanding         3,335,925    3,306,762


PERFORMANCE RATIOS (annualized)

Net Income (Loss) Available to Common
 Stockholders to Average Assets                          0.64%       -0.02%
Net Income (Loss) Available to Common
 Stockholders to Average Equity                         12.16%       -0.32%
Net interest margin (tax-equivalent)                     4.42%        3.90%
Efficiency ratio (tax-equivalent)                       70.11%       69.26%


ASSET QUALITY

Net loan charge-offs                              $     1,694  $     1,366
Total non-performing loans (non-accrual, past due
 over 90 days, troubled debt restructuring)       $   104,333  $    67,291
Non-performing loans as a % of total loans              15.16%        9.08%

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