Princeton National Bancorp, Inc. ("Princeton" or "the Company")
(NASDAQ: PNBC) announced a loss for the fourth quarter and full
year of 2009 as a result of a write-down of goodwill assets and an
increased provision for possible loan losses.
The net loss to common stockholders for the fourth quarter was
$25.3 million, or $7.65 per fully diluted common share. The net
loss to common stockholders for the year amounted to $22.3 million,
or $6.76 per common share on a fully diluted basis. Without the
goodwill write-down, the Company would have recorded net income for
2009. The provision for possible loan losses amounted to $6.0
million in the fourth quarter and totaled $11.1 million for 2009,
compared to $3.0 million in 2008.
The goodwill impairment charge amounted to $24.5 million and
eliminated all goodwill from the Company's balance sheet. It
represented a one-time, non-cash charge and had no effect on
liquidity, cash flows, or operations. The goodwill amount resulted
from several bank acquisitions over the past two decades. It
represented the excess of the prices paid for the acquisitions over
the fair value of their net assets. If the implied fair value of
goodwill is less than its carrying amount, the amount of goodwill
is deemed "impaired" and must be written down to its implied value.
In 2009, the Company's stock traded at a market price below its
book value, triggering the goodwill impairment and prompting the
write-down.
"The one-time goodwill impairment charge eliminated all goodwill
from our balance sheet," said Thomas D. Ogaard, President and CEO.
"The Company continued to maintain a favorable overall operating
position and generate positive operating earnings for the full year
2009 -- impressive achievements in view of the economic environment
state and nationwide."
The Company reported net interest income for 2009 rose to $34.7
million from $31.5 million for 2008. Non-interest income also
increased to $13.2 million from $11.6 million in the previous
year.
"Our basic operating earnings remained strong," said Thomas D.
Ogaard, President and CEO. "Net interest income and non-interest
income both grew last year from 2008 levels in the midst of
continuing tough economic conditions."
The Company's total assets increased slightly to $1.261 billion
at year-end 2009 from $1.163 billion a year earlier. Total loans
also rose to $794.8 million from $790.8 million. The allowance for
loan losses stood at $12.1 million on December 31, 2009, an
increase of 138% from its level of $5.1 million on December 31,
2008. At year-end 2009, non-performing loans were 6.74% of total
loans, compared to 4.18% of total loans at the end of 2008. Loan
charge-offs for 2009 were $4.1 million, up from $1.2 million for
2008. The ratio of Tier 1 Capital to adjusted total assets was
7.48% on December 31, 2009, up from 6.22% a year earlier. The ratio
of Total Risk-Based Capital to assets rose to 11.50% at the end of
last year, compared to 8.30% at the end of 2008.
"The increased loan-loss allowance strengthens our reserves and
helps us deal effectively with problem loans," said Ogaard. "While
our charge-offs increased in 2009, on a percentage basis they were
below the industry average."
As a further step in bolstering its capital strength, the
Company is also announcing the suspension of its quarterly common
stock dividend. The most recent dividend, paid in the fourth
quarter of 2009 for the third quarter, was 14 cents per share of
common stock.
"By retaining all of our earnings, we are able to increase our
capital at a faster rate than if we had paid out a portion of our
earnings to shareholders in the form of dividends," said Ogaard.
"Reinvesting all earnings benefits shareholders, customers and
employees by enabling us to maintain a strong and profitable
institution." He said the Company will continue to evaluate its
capital position on a regular basis to determine when the dividend
can be reinstated.
The Company also announced that Citizens First National Bank
("the Bank"), its subsidiary bank, has entered into a formal
agreement with the Office of the Comptroller of the Currency (OCC),
its principal regulator. The agreement, dated March 15, 2010,
requires the Bank to establish a program to ensure an adequate loan
loss allowance is maintained, and to review the program at least
once each quarter. The Bank is also required within 30 days to
develop individual workout plans for certain substandard loans and
to improve its loan risk rating.
"We view the terms of the OCC agreement as reasonable and very
manageable, and are ahead of schedule to meet or exceed the
deadlines established in the formal agreement," said Ogaard.
Regulation G Disclosure
This press release contains non-GAAP financial measures within
the meaning of Regulation G promulgated by the Securities and
Exchange Commission (the "SEC"). The Company believes that these
non-GAAP financial measures provide information that is useful to
the users of its financial information regarding the Company's
financial condition and results of operations. Additionally, the
Company uses these non-GAAP measures to evaluate its past
performance and prospects for future performance. The Company
believes that this non-GAAP financial information is helpful in
understanding the results of operations separate and apart from
items that may, or could, have a disproportional positive or
negative impact in any particular period.
During the fourth quarter of 2009, the Company recorded a
non-cash goodwill impairment charge. The Company believes that
excluding the after-tax effects of these charges from its
discussion of the core operating results will provide investors
with a basis to compare the operating results without material
distortions caused by this non-operating charge. The following
table reconciles the non-GAAP financial measure "Net Income,
excluding goodwill impairment charge" with Net Income (Loss)
available to common stockholders calculated and presented in
accordance with GAAP.
Year Ended
December 31, Diluted EPS
2009 Impact
Net income (loss) available to common
stockholders, as reported $ (22,329) $ (6.76)
Goodwill impairment charge, net of income tax 24,521 7.43
----------- -----------
Net income available to common stockholders,
excluding goodwill impairment charge $ 2,192 0.67
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) December 31, December 31,
2009 2008
(unaudited)
------------ ------------
ASSETS
Cash and due from banks $ 18,833 $ 20,163
Interest-bearing deposits with financial
institutions 55,527 98
Federal funds sold 0 0
------------ ------------
Total cash and cash equivalents 74,360 20,261
Loans held for sale, at lower of cost or market 3,296 2,155
Investment securities available-for-sale, at
fair value 288,474 236,883
Investment securities held-to-maturity, at
amortized cost 12,793 14,232
------------ ------------
Total investment securities 301,267 251,115
Loans, net of unearned interest 794,787 790,837
Allowance for loan losses (12,075) (5,064)
------------ ------------
Net loans 782,712 785,773
Premises and equipment, net 28,269 29,297
Land held for sale, at lower of cost or market 2,354 2,354
Federal Reserve and Federal Home Loan Bank
stock 4,230 4,211
Bank-owned life insurance 22,540 21,588
Interest receivable 9,267 9,693
Goodwill, net of accumulated amortization 0 24,521
Intangible assets, net of accumulated
amortization 3,347 4,207
Other real estate owned 17,658 2,487
Other assets 11,430 5,468
------------ ------------
TOTAL ASSETS $ 1,260,730 $ 1,163,130
============ ============
------------ ------------
LIABILITIES
Demand deposits $ 136,026 $ 110,559
Interest-bearing demand deposits 374,624 246,714
Savings deposits 68,292 61,089
Time deposits 496,597 543,770
------------ ------------
Total deposits 1,075,539 962,132
Customer repurchase agreements 47,327 35,532
Advances from the Federal Home Loan Bank 31,500 32,493
Interest-bearing demand notes issued to the
U.S. Treasury 1,021 2,441
Federal funds purchased 0 6,500
Trust Preferred securities 25,000 25,000
Note payable 0 16,050
------------ ------------
Total borrowings 104,848 118,016
Other liabilities 5,683 10,511
------------ ------------
Total liabilities 1,186,070 1,090,659
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock 24,958 0
Common stock 22,391 22,391
Common stock warrants 150 0
Additional paid-in capital 18,423 18,420
Retained earnings 29,851 54,329
Accumulated other comprehensive income (loss),
net of tax 2,816 1,402
Less: Treasury stock (23,929) (24,071)
------------ ------------
Total stockholders' equity 74,661 72,471
------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,260,730 $ 1,163,130
============ ============
CAPITAL STATISTICS (UNAUDITED)
YTD average equity to average assets 7.84% 6.25%
Tier 1 leverage capital ratio 7.48% 6.22%
Tier 1 risk-based capital ratio 10.25% 7.72%
Total risk-based capital ratio 11.50% 8.30%
Common book value per share $ 15.03 $ 21.97
Closing market price per share $ 10.81 $ 22.14
End of period shares outstanding 3,306,369 3,298,041
End of period treasury shares outstanding 1,171,926 1,180,254
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share data)
THREE THREE TWELVE TWELVE
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
December December December December
31, 2009 30, 2008 31, 2009 30, 2008
(unaudited) (unaudited) (unaudited) (unaudited)
---------- ---------- ---------- ----------
INTEREST INCOME
Interest and fees on loans $ 10,225 $ 11,586 $ 43,719 $ 47,715
Interest and dividends on
investment securities 3,309 2,872 12,903 10,982
Interest on federal funds
sold 0 5 0 71
Interest on
interest-bearing time
deposits in other banks 38 8 114 54
---------- ---------- ---------- ----------
Total Interest Income 13,573 14,471 56,736 58,822
---------- ---------- ---------- ----------
INTEREST EXPENSE
Interest on deposits 4,142 5,532 19,220 23,782
Interest on borrowings 687 861 2,865 3,519
---------- ---------- ---------- ----------
Total Interest Expense 4,828 6,393 22,085 27,301
---------- ---------- ---------- ----------
Net interest income 8,744 8,078 34,651 31,521
Provision for loan losses 6,017 1,600 11,062 2,968
---------- ---------- ---------- ----------
Net interest income after
provision 2,727 6,478 23,590 28,553
---------- ---------- ---------- ----------
NON-INTEREST INCOME
Trust & farm management
fees 330 410 1,334 1,530
Service charges on deposit
accounts 958 1,032 3,961 4,408
Other service charges 506 550 1,954 2,137
Gain on sales of securities
available-for-sale 982 74 1,781 405
Brokerage fee income 217 237 857 913
Mortgage banking income 952 190 2,277 1,069
Bank-owned life insurance 233 226 941 874
Other operating income 20 118 139 257
---------- ---------- ---------- ----------
Total Non-Interest
Income 4,197 2,837 13,244 11,593
---------- ---------- ---------- ----------
NON-INTEREST EXPENSE
Salaries and employee
benefits 4,497 4,611 18,011 17,692
Occupancy 646 651 2,598 2,559
Equipment expense 767 828 3,071 2,996
Federal insurance
assessments 495 578 2,584 845
Goodwill impairment losses 24,521 0 24,521 0
Intangible assets
amortization 196 178 816 714
Data processing 317 300 1,290 1,151
Advertising 173 218 751 742
ORE Expenses, net 243 52 1,064 201
Other operating expense 1,274 1,011 4,854 4,223
---------- ---------- ---------- ----------
Total Non-Interest
Expense 33,128 8,427 59,560 31,123
---------- ---------- ---------- ----------
Income before income taxes (26,204) 888 (22,727) 9,023
Income tax expense (1,263) (139) (1,600) 1,697
---------- ---------- ---------- ----------
Net income (24,941) 1,027 (21,127) 7,326
Preferred stock dividends 311 0 1,178 0
Accretion of preferred
stock discount 7 0 25 0
---------- ---------- ---------- ----------
Net income available to
common stockholders $ (25,258) $ 1,027 $ (22,329) $ 7,326
========== ========== ========== ==========
Net income per share:
BASIC $ (7.65) $ 0.31 $ (6.76) $ 2.22
DILUTED $ (7.65) $ 0.31 $ (6.76) $ 2.21
Basic weighted average
shares outstanding 3,303,594 3,296,743 3,301,016 3,297,990
Diluted weighted average
shares outstanding 3,303,736 3,301,233 3,301,462 3,314,439
PERFORMANCE RATIOS
(annualized)
Return on average assets -7.68% 0.36% -1.69% 0.66%
Return on average equity -96.54% 5.90% -21.58% 10.59%
Net interest margin
(tax-equivalent) 3.39% 3.38% 3.44% 3.44%
Efficiency ratio
(tax-equivalent) 241.51% 73.21% 117.31% 68.66%
ASSET QUALITY
Net loan charge-offs $ 1,702 $ 378 $ 4,052 $ 1,151
Total non-performing loans $ 53,537 $ 33,038 $ 53,537 $ 33,038
Non-performing loans as a %
of total loans 6.74% 4.18% 6.74% 4.18%
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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