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