Princeton National Bancorp, Inc. (the "Corporation") (NASDAQ:
PNBC), parent corporation of Citizens First National Bank
("Subsidiary Bank"), announced a net loss available to common
stockholders for the third quarter of 2011 of $19,146,000 or
$(5.75) per basic and diluted common share ("EPS"), compared to a
loss of $2,232,000 or $(0.67) EPS in the third quarter of 2010. The
net loss was caused by the recording of a net deferred tax asset
valuation allowance of $14,584,000; a provision for loan losses
expense of $7,975,000 (resulting from the continued collateral
de-valuation in troubled real estate markets); increasing costs to
carry and manage other real estate owned properties of $853,000;
and recognition of an impairment on originated mortgage servicing
rights of $817,000 due to the historically low interest rate
environment.
During the third quarter, the Corporation recorded a valuation
allowance for its net deferred tax asset due to the losses
experienced over the last three years as well as revised downward
earnings forecasts in the immediate future from the acceleration of
provision for loan losses and loan collection and other real estate
owned expenses. Therefore, as of September 30, 2011, the carrying
value of the Corporation's net deferred tax assets was reduced to
$0.00 through the recognition of a $14,584,000 valuation allowance.
Each quarter the Corporation will evaluate whether the current
conditions support a change in the valuation allowance against
deferred tax assets. Any reduction in the estimated valuation
allowance in future quarters would lower the amount of income tax
expense recognized by the Corporation.
Non-performing loans amounted to 14.51% of total loans at
September 30, 2011 compared to 13.83% at December 31, 2010. This
increase reflects continued stress on the commercial real estate
market, primarily from persistent economic issues and their impact
on consumer spending and the housing industry. The provision for
loan loss expense recorded each quarter is determined by
management's evaluation of the risk characteristics of the loan
portfolio. The Corporation recorded a provision for loan loss of
$7,975,000 in the third quarter of 2011 compared to $6,725,000 in
the third quarter of 2010.
"The aggressive identification and resolution of problem loans
remains an ongoing effort," stated Thomas D. Ogaard, President
& CEO. "It is expected that these aggressive tactics will be
beneficial in shortening the timeframe to when the Bank can return
to a more normalized operating environment."
Net charge-offs increased during the third quarter of 2011 to
$10,593,000, compared to net charge-offs of $4,147,000 for the
third quarter of 2010. The Corporation's net charge-offs have grown
and remain high due to the continued downward pressure on real
estate values, particularly development properties. The growth
trends in charge-offs and corresponding provision for loan losses
are expected to begin to diminish due to the Corporation's
aggressive efforts to identify and resolve problem loans and as
signs of economic stabilization begin to appear in the commercial
real estate market.
Princeton National Bancorp, Inc.'s net interest income before
the provision for loan losses was $8,365,000 for the third quarter
of 2011, compared to $9,245,000 for the third quarter of 2010 due
to a decrease in the average interest-earning base of $113.5
million. The net interest margin decreased to 3.92% in the third
quarter of 2011 from 4.14% in the third quarter of 2010, from the
impact of a high level of non-accrual loans, a decrease in loans
from the lack of sufficient quality loan demand and the
historically low interest rate environment.
Non-interest income totaled $2,089,000 in the third quarter of
2011, compared to $2,474,000 in the third quarter of 2010. This
decrease was primarily due to the recognition of impairment on
originated mortgage servicing rights of $817,000 in the third
quarter of 2011 compared to impairment of $333,000 in the third
quarter of 2010. Annualized non-interest income as a percentage of
total average assets decreased to 0.77% for the third quarter of
2011, from 0.87% for the same period in 2010.
Total non-interest expense for the third quarter of 2011 was
$10,089,000, an increase from $9,047,000 in the third quarter of
2010. The primary difference between the two quarters was an
increase in expenses related to other real estate owned of
$407,000, due to updated property valuations, and an increase in
loan collection expenses of $459,000. Annualized non-interest
expense as a percentage of total average assets increased to 3.72%
for the third quarter of 2011, compared to 3.19% for the same
period in 2010.
Stockholders' equity as of September 30, 2011 decreased to
$39,184,000 from $56,861,000 at December 31, 2010. Total
stockholders' equity to total assets at September 30, 2011
decreased to 3.66% from 5.19% at December 31, 2010.
On October 27, 2011, the Corporation entered into a Written
Agreement with the Federal Reserve Bank (the "FRB"). The
Corporation has taken steps to address the issues raised in the
Written Agreement and intends to fully comply with the requirements
set forth. For details on the Written Agreement please refer to the
Form 8-K which was filed on November 2, 2011.
Princeton National Bancorp, Inc., through its wholly owned
subsidiary Citizens First National Bank, operates community banking
offices with strategic locations in 8 counties in northern
Illinois. Total assets at September 30, 2011 decreased to $1.070
billion from $1.096 billion at December 31, 2010. Total loan
balances decreased by $65.5 million during the nine month period to
$638.6 million due to seasonal pay downs in the agricultural
portfolio and general decline in the overall demand for new
low-risk credit. The decrease in assets reflects the Corporation's
2011 capital management objectives.
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) September 30, December 31,
2011 2010
(unaudited)
------------- -------------
ASSETS
Cash and due from banks $ 18,400 $ 12,992
Interest-bearing deposits with financial
institutions 65,969 30,888
------------- -------------
Total cash and cash equivalents 84,369 43,880
Loans held for sale, at lower of cost or
market 2,113 5,515
Investment securities available-for-sale, at
fair value 254,267 248,752
Investment securities held-to-maturity, at
amortized cost 11,344 12,187
------------- -------------
Total investment securities 265,611 260,939
Loans, net of unearned interest 638,553 704,074
Allowance for loan losses (16,511) (29,726)
------------- -------------
Net loans 622,042 674,348
Premises and equipment, net 25,937 26,901
Land held for sale, at lower of cost or market 2,244 2,244
Federal Reserve and Federal Home Loan Bank
stock 4,500 4,498
Bank-owned life insurance 24,103 23,416
Interest receivable 7,179 7,482
Deferred income taxes 0 10,512
Intangible assets, net of accumulated
amortization 2,020 2,531
Other real estate owned 18,502 20,652
Other assets 11,163 13,553
------------- -------------
TOTAL ASSETS $ 1,069,783 $ 1,096,471
============= =============
LIABILITIES
Demand deposits $ 149,361 $ 138,683
Interest-bearing demand deposits 386,348 383,126
Savings deposits 79,635 74,817
Time deposits 323,881 366,335
------------- -------------
Total deposits 939,225 962,961
Customer repurchase agreements 54,262 35,806
Advances from the Federal Home Loan Bank 5,000 9,000
Interest-bearing demand notes issued to the
U.S. Treasury 1,538 1,753
Trust Preferred securities 25,000 25,000
------------- -------------
Total borrowings 85,800 71,559
Other liabilities 5,574 5,090
------------- -------------
Total liabilities 1,030,599 1,039,610
------------- -------------
STOCKHOLDERS' EQUITY
Preferred stock 25,008 24,986
Common stock 22,391 22,391
Common stock warrants 150 150
Additional paid-in capital 18,221 18,275
Retained earnings (deficit) (8,448) 11,589
Accumulated other comprehensive income (loss),
net of tax 5,319 3,064
Less: Treasury stock (23,457) (23,594)
------------- -------------
Total stockholders' equity 39,184 56,861
------------- -------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,069,783 $ 1,096,471
============= =============
CAPITAL STATISTICS (UNAUDITED)
YTD average equity to average assets 5.27% 6.62%
Tier 1 leverage capital ratio 4.26% 5.93%
Tier 1 risk-based capital ratio 6.38% 8.40%
Total risk-based capital ratio 7.64% 9.68%
Common book value per share $ 4.25 $ 9.58
Closing market price per share $ 3.18 $ 3.64
End of period shares outstanding 3,333,890 3,325,941
End of period treasury shares outstanding 1,144,405 1,152,354
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share data)
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
September 30, September 30, September 30, September 30,
2011 2010 2011 2010
(unaudited) (unaudited) (unaudited) (unaudited)
------------- ------------- ------------- -------------
INTEREST INCOME
Interest and fees
on loans $ 7,874 $ 9,632 $ 24,919 $ 30,059
Interest and
dividends on
investment
securities 2,173 2,378 6,941 7,713
Interest on
interest-bearing
time deposits in
other banks 37 32 93 104
------------- ------------- ------------- -------------
Total Interest
Income 10,084 12,042 31,953 37,876
------------- ------------- ------------- -------------
INTEREST EXPENSE
Interest on
deposits 1,522 2,318 4,894 8,348
Interest on
borrowings 197 479 581 1,615
------------- ------------- ------------- -------------
Total Interest
Expense 1,719 2,797 5,475 9,963
------------- ------------- ------------- -------------
Net interest
income 8,365 9,245 26,478 27,913
Provision for
loan losses 7,975 6,725 17,900 13,300
------------- ------------- ------------- -------------
Net interest
income after
provision 390 2,520 8,578 14,613
------------- ------------- ------------- -------------
NON-INTEREST
INCOME
Trust & farm
management fees 256 269 815 850
Service charges
on deposit
accounts 1,087 1,004 3,032 2,853
Other service
charges 565 469 1,391 1,436
Gain on sales of
securities
available-for-
sale 11 0 2,693 722
Brokerage fee
income 148 134 494 547
Mortgage
servicing rights
recovery
(impairment) (817) (333) (817) (922)
Mortgage banking
income 572 694 1,312 1,457
Bank-owned life
insurance income 231 227 677 684
Other operating
income 36 10 119 68
------------- ------------- ------------- -------------
Total Non-
Interest
Income 2,089 2,474 9,716 7,695
------------- ------------- ------------- -------------
NON-INTEREST
EXPENSE
Salaries and
employee
benefits 4,659 4,628 13,804 13,494
Occupancy 677 645 1,989 1,978
Equipment expense 754 782 2,316 2,296
Federal insurance
assessments 681 603 1,768 1,835
Intangible assets
amortization 144 204 513 606
Data processing 301 355 1,016 987
Marketing 151 154 445 536
ORE Expenses, net 853 446 2,868 1,567
Loan collection
expenses 563 104 1,097 492
Write-down of
land held-for-
sale 0 110 0 110
Other operating
expense 1,306 1,016 3,941 3,248
------------- ------------- ------------- -------------
Total Non-
Interest
Expense 10,089 9,047 29,757 27,149
------------- ------------- ------------- -------------
Loss before
income taxes (7,610) (4,053) (11,463) (4,841)
Income tax
expense
(benefit) 11,215 (2,142) 8,552 (3,609)
------------- ------------- ------------- -------------
Net loss (18,825) (1,911) (20,015) (1,232)
Preferred stock
dividends 0 314 0 941
Dividends in
arrears on
preferred stock 314 0 941 0
Accretion of
preferred stock
discount 7 7 22 21
------------- ------------- ------------- -------------
Net loss
available to
common
stockholders $ (19,146) $ (2,232) $ (20,978) $ (2,194)
============= ============= ============= =============
Net loss per
share available
to common
stockholders:
BASIC $ (5.75) $ (0.67) $ (6.30) $ (0.66)
DILUTED $ (5.75) $ (0.67) $ (6.30) $ (0.66)
Basic weighted
average shares
outstanding 3,330,080 3,313,029 3,328,041 3,309,869
Diluted weighted
average shares
outstanding 3,330,080 3,313,029 3,328,041 3,309,869
PERFORMANCE
RATIOS
(annualized)
Net Income (Loss)
Available to
Common
Stockholders to
Average Assets -7.06% -0.79% -2.58% -0.25%
Net Income (Loss)
Available to
Common
Stockholders to
Average Equity -135.49% -11.28% -49.04% -3.80%
Net interest
margin (tax-
equivalent) 3.92% 4.14% 4.15% 4.00%
Efficiency ratio
(tax-equivalent) 93.35% 72.69% 79.40% 71.84%
ASSET QUALITY
Net loan charge-
offs $ 10,593 $ 4,148 $ 31,115 $ 6,871
Total non-
performing loans
(non-accrual,
past due over 90
days, troubled
debt
restructuring) $ 92,660 $ 82,655 $ 92,660 $ 82,655
Non-performing
loans as a % of
total loans 14.51% 11.36% 14.51% 11.36%
Inquiries should be directed to: Lou Ann Birkey Vice President -
Investor Relations, Princeton National Bancorp, Inc. (815) 872-6131
E-Mail address: Email Contact
Princeton National Bancorp (CE) (USOTC:PNBC)
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