Princeton National Bancorp, Inc. (the "Corporation" or "PNBC")
(NASDAQ: PNBC), parent corporation of Citizens First National Bank
(the "Bank"), ended the first quarter 2012 with net income
available to common stockholders of $686,000, or $.20 per common
share on a fully diluted basis, compared to $1.414 million for the
first quarter of 2011, or $.42 per common share on a fully diluted
basis. This decrease is primarily attributable to a lower level of
net interest income and fewer gains recognized on the sale of
available for sale investment securities, partially offset by a
reduction in the provision for loan losses. The net income
available to common stockholders to average equity increased to
45.81%, for the first quarter of 2012, compared with 9.95% for the
first quarter of 2011.
Net interest income, before the provision for loan losses, was
$7.720 million for the quarter and the net yield on
interest-bearing assets (on a fully taxable equivalent basis) was
3.89%. There was a decrease in the net interest margin in
comparison to the first quarter of 2011 due to continued yield
compression, in both the loan and investment portfolios in this
historically low interest rate environment. The yield compression
was partially offset by a reduction in the cost of interest-bearing
liabilities, primarily time deposits, which decreased to .60% from
0.88% for the first quarter of 2011.
The Corporation's provision for loan loss expense recorded each
quarter is determined by management's evaluation of the risk
characteristics of the loan portfolio. Net charge-offs decreased
during the first quarter of 2012 to $747,000, compared to net
charge-offs of $1.694 million for the first quarter of 2011. The
Corporation recorded a loan loss provision of $75,000 in the first
quarter of 2012 compared to a provision of $1.875 million in the
first quarter of 2011.
Non-interest income totaled $3.143 million for the first quarter
of 2012, compared to $3.600 million in the first quarter of 2011.
This decrease was due to a reduction in the realization of gains on
securities sold of $530,000 in the first quarter of 2012 compared
to the same period in 2011. Annualized non-interest income as a
percentage of total average assets decreased to 1.24% for the first
three months of 2012, from 1.33% for the same period in 2011.
Total non-interest expense for the first quarter of 2012 was
$9.728 million up from $9.435 million in the first quarter of 2011.
The largest differences between the first quarters of 2012 and 2011
were an increase in loan collection costs and deposit insurance
assessments of $747,000 and $276,000, respectively, due to
increased costs incurred in the aggressive collection of problem
loans and higher risk-assessed FDIC insurance premiums. These
increases were partially offset by net gains realized on the sale
of other real estate owned properties. Annualized non-interest
expense as a percentage of total average assets increased to 3.85%
for the first three months of 2012, compared to 3.50% for the same
period in 2011.
Total assets at March 31, 2012 increased to $1.021 billion from
$1.014 billion at December 31, 2011. Total loan balances decreased
by $49.7 million during the three month period to $571.3 million
due to seasonal pay downs in the agricultural portfolio and
continued general decline in the overall demand for new low-risk
credit. The continued negative effects of the current economic
environment in which business and consumer borrowers have reduced
demand and capacity for new indebtedness has impacted growth in our
loan portfolio and resulted in a higher percentage of loans being
charged off or transferred to other real estate owned.
Non-performing loans amounted to 19.8% of total loans at March 31,
2012 compared to 16.26% at December 31, 2011. The increase reflects
a continued high level of stress in the commercial real estate
industry. Investment balances totaled $292.2 million at March 31,
2012, compared to $261.6 million at December 31, 2011. Total
deposits increased to $921.8 million at March 31, 2012 from $917.3
million at December 31, 2011.
The allowance for loan losses of $29.7 million and $30.4
million, respectively, was 5.21% and 4.90% of total loans as of
March 31, 2012 and December 31, 2011. The Corporation's net
charge-offs as a percentage of average loans was 0.15% and 8.74%
for the three months ended March 31, 2012 and year ended December
31, 2011, respectively. The Corporation's net charge-offs and the
level of required allowance for loan losses declined in the first
three months of 2012 from the high levels experienced in 2010 and
2011 due to the Corporation's aggressive efforts to identify and
recognize the impact of the troubled loan portfolio. The allowance
for loan losses as a percentage of non-performing loans decreased
to 29.5% as of March 31, 2012 from 30.1% as of December 31, 2011.
The allowance for loan losses calculation takes into consideration
continuing economic declines and resulting increases in
non-performing loans in the quantitative and qualitative factors
used to adjust the reserve percentages on loans not specifically
reserved for in the calculation.
Total stockholders' equity has increased $809,000 to $5.744
million as of March 31, 2012 from $4.935 million at December 31,
2011, due to net income of $686,000 and the change in the
unrealized gain on available for sale investment securities.
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. On March 29, 2012, the
subsidiary bank's Board of Directors received a Prompt Corrective
Action Notice under 12 U.S.C. 1831o and 12 C.F.R. Part 6 due to its
amended Call Report filed with the OCC on March 22, 2012 reflecting
capital ratios in the Significantly Undercapitalized PCA capital
category. This Notice places the Bank under certain restrictions
regarding the payment of capital distributions and management fees,
as well as restrictions on asset growth, on certain expansion
activities and on payment of bonuses and compensation to senior
executive officers. These mandatory requirements also include a
requirement that the Bank submit an acceptable Capital Restoration
Plan ("CRP") to the OCC, addressing the steps the Bank will take to
become adequately capitalized, the levels of capital to be attained
during each quarter of each year of the CRP, the types and level of
activities in which the Bank will engage; and how management will
comply with the restrictions against asset growth, and acquisition,
branching and new lines of business. The CRP was submitted on May
7, 2012.
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.
On April 18, 2012, the Corporation received written notice from
the Listing Qualifications Staff of the NASDAQ stock market that as
of December 31, 2011 the Corporation was no longer in compliance
with the minimum stockholders' equity requirement for continued
listing on the NASDAQ Global Market of $10 million. The Listing
Notice does not result in the immediate delisting of the
Corporation's common stock from the NASDAQ Global Market. Rather,
in accordance with the NASDAQ Listing Rules, the Corporation has 45
calendar days from the date of the Listing Notice to submit to the
Staff a plan to regain compliance with this continued listing
requirement. The plan has been submitted and if it is accepted by
NASDAQ they may grant an extension of up to 180 calendar days from
the date of the Listing Notice for the Corporation to provide
evidence of compliance.
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) March 31 December 31,
2012 2011
(unaudited)
------------- -------------
ASSETS
Cash and due from banks $ 11,986 $ 16,307
Interest-bearing deposits with financial
institutions 90,956 46,988
------------- -------------
Total cash and cash equivalents 102,942 63,295
Loans held for sale, at lower of cost or market 946 2,220
Investment securities available-for-sale, at
fair value 284,282 251,747
Investment securities held-to-maturity, at
amortized cost 7,893 9,836
------------- -------------
Total investment securities 292,175 261,583
Loans, net of unearned interest 571,295 621,021
Allowance for loan losses (29,741) (30,413)
------------- -------------
Net loans 541,554 590,608
Premises and equipment, net 25,615 25,850
Land held for sale, at lower of cost or market 2,164 2,164
Federal Reserve and Federal Home Loan Bank stock 4,500 4,500
Bank-owned life insurance 24,559 24,330
Interest receivable 5,029 6,453
Deferred income taxes 0 0
Intangible assets, net of accumulated
amortization 1,740 1,877
Other real estate owned 12,389 21,848
Other assets 7,608 9,588
------------- -------------
TOTAL ASSETS $ 1,021,221 $ 1,014,316
============= =============
LIABILITIES
Demand deposits $ 173,816 $ 171,939
Interest-bearing demand deposits 358,298 353,462
Savings deposits 90,963 84,599
Time deposits 298,747 307,295
------------- -------------
Total deposits 921,824 917,295
Customer repurchase agreements 57,497 54,835
Advances from the Federal Home Loan Bank 5,000 5,000
Interest-bearing demand notes issued to the U.S.
Treasury 0 0
Trust Preferred securities 25,000 25,000
------------- -------------
Total borrowings 87,497 84,835
Other liabilities 6,156 7,251
------------- -------------
Total liabilities 1,015,477 1,009,381
------------- -------------
STOCKHOLDERS' EQUITY
Preferred stock 25,023 25,016
Common stock 22,391 22,391
Common stock warrants 150 150
Additional paid-in capital 17,916 18,126
Accumulated Deficit (41,791) (42,791)
Accumulated other comprehensive income (loss),
net of tax 5,133 5,378
Less: Treasury stock (23,078) (23,335)
------------- -------------
Total stockholders' equity 5,744 4,935
------------- -------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,021,221 $ 1,014,316
============= =============
CAPITAL STATISTICS (UNAUDITED)
YTD average equity to average assets 0.59% 4.80%
Tier 1 leverage capital ratio -0.14% -0.24%
Tier 1 risk-based capital ratio -0.23% -0.38%
Total risk-based capital ratio -0.23% -0.38%
Common book value per share $ (5.74)$ (6.01)
Closing market price per share $ 3.69 $ 1.51
End of period shares outstanding 3,356,025 3,341,029
End of period treasury shares outstanding 1,122,270 1,137,266
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share data)
THREE MONTHS THREE MONTHS
ENDED ENDED
March 31, March 31,
2012 2011
(unaudited) (unaudited)
------------- -------------
INTEREST INCOME
Interest and fees on loans $ 6,821 $ 8,859
Interest and dividends on investment securities 2,086 2,414
Interest on interest-bearing time deposits in
other banks 47 21
------------- -------------
Total Interest Income 8,954 11,294
------------- -------------
INTEREST EXPENSE
Interest on deposits 1,018 1,738
Interest on borrowings 216 199
------------- -------------
Total Interest Expense 1,234 1,937
------------- -------------
Net interest income 7,720 9,357
Provision for loan losses 75 1,875
------------- -------------
Net interest income after provision 7,645 7,482
------------- -------------
NON-INTEREST INCOME
Trust & farm management fees 290 290
Service charges on deposit accounts 970 943
Other service charges 487 405
Gain on sales of securities available-for-sale 554 1,084
Brokerage fee income 154 139
Mortgage servicing rights recovery (impairment) 0 0
Mortgage banking income 367 451
Bank-owned life insurance income 220 221
Other operating income 101 67
------------- -------------
Total Non-Interest Income 3,143 3,600
------------- -------------
NON-INTEREST EXPENSE
Salaries and employee benefits 4,774 4,616
Occupancy 652 689
Equipment expense 763 781
Federal insurance assessments 916 640
Intangible assets amortization 140 194
Data processing 372 366
Marketing 176 155
ORE Expenses, net (347) 582
Loan collection expenses 910 163
Write-down of land held-for-sale 0 0
Other operating expense 1,372 1,249
------------- -------------
Total Non-Interest Expense 9,728 9,435
------------- -------------
Income before income taxes 1,060 1,647
Income tax expense (benefit) 53 (88)
------------- -------------
Net income 1,007 1,735
Preferred stock dividends 0 0
Dividends in arrears on preferred stock 314 314
Accretion of preferred stock discount 7 7
------------- -------------
Net income available to common stockholders $ 686 $ 1,414
============= =============
Net income per share available to common
stockholders:
BASIC $ 0.20 $ 0.43
DILUTED $ 0.20 $ 0.42
Basic weighted average shares outstanding 3,353,556 3,325,964
Diluted weighted average shares outstanding 3,353,556 3,329,409
PERFORMANCE RATIOS (annualized)
Net Income Available to Common Stockholders to
Average Assets 0.27% 0.52%
Net Income Available to Common Stockholders to
Average Equity 45.81% 9.59%
Net interest margin (tax-equivalent) 3.89% 4.42%
Efficiency ratio (tax-equivalent) 87.04% 70.11%
ASSET QUALITY
Net loan charge-offs $ 747 $ 1,694
Total non-performing loans (non-accrual, past
due over 90 days, troubled debt restructuring) $ 100,665 $ 104,333
Non-performing loans as a % of total loans 19.79% 15.16%
Inquiries should be directed to: Lou Ann Birkey Vice President
Investor Relations Princeton National Bancorp, Inc. (815) 872-6131
E-Mail address: Email Contact
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