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Princeton National Bancorp, Inc.: Princeton National Bancorp, Inc. Increases Fully Diluted Earnings per Share 9.4% in 2008

^{Published on 2009-01-26 11:16:01, Last Modified on 2009-01-26 11:19:40 - Market Wire}
 

PRINCETON, IL--(Marketwire - January 26, 2009) - Princeton National Bancorp, Inc. ("Princeton" or "the Company") (NASDAQ: [ PNBC ])

Tony J. Sorcic, President & CEO, stated, "Princeton National Bancorp, Inc. continues to perform well in light of the unprecedented turmoil in the financial markets and the continued deterioration of the housing market. During 2008, fully diluted earnings per share of $2.22 were generated compared to $2.03 in 2007. Net income for the year was $7.326 million, up 8.2% from $6.770 million in 2007. The return on average equity also increased to 10.59% from 10.32%. Net income for Citizens First National Bank, the subsidiary bank, reached a record level of $8.746 million."

Sorcic continued, "The Board of Directors has declared a dividend of $.28 per share, payable February 25, 2009, to those shareholders of record as of February 6, 2009. This is the Company's 96th consecutive dividend. The 2008 total dividend of $1.12 represents an increase of 220% over the last ten years."

Sorcic concluded, "In these uncertain economic times, Management believes it is prudent to position the Company with extra capital, which will also allow us to take advantage of future opportunities. With the changes in the financial industry, the well-capitalized banking organizations in attractive markets will be the survivors when the turmoil settles. On January 23rd, the Company received a $25.1 million investment from the U.S. Treasury Department TARP Capital Purchase Program. This Program is designed to provide additional capital to healthy, well-managed financial institutions. We are confident the funds received from the Treasury can be leveraged to increase revenue, fund loan growth and make acquisitions."

The investment by the U.S. Treasury Department is comprised of $25.1 million in senior preferred shares, with warrants to purchase 155,025 shares of Princeton common stock at a price of $24.27, and at a term of 10 years. The senior preferred stock will pay a cumulative dividend at a coupon rate of 5% for the first five years and 9% thereafter. This investment can be redeemed after three years at par value plus unpaid dividends. As of December 31, 2008, the Tier 1 Capital Ratio for Princeton was 5.98% at December 31, 2008. If the TARP funds were included, this ratio increases to 8.22%. Likewise, the Risk Based Capital Ratio would increase from 8.30% to 11.19%. As of December 31, 2008, Princeton National Bancorp, Inc. had 3,298,041 shares of common stock outstanding.

The Board of Directors is pleased to announce Gretta E. Bieber has been appointed to the Princeton National Bancorp, Inc. Board of Directors. Bieber served on the Somonauk FSB Bancorp, Inc. Board of Directors from 2001 to 2005 and then joined the Citizens First National Bank Board of Directors' after the acquisition of Somonauk FSB Bancorp, Inc. Bieber will fill the vacancy created upon Thomas Longman's retirement. Bieber is an attorney for Alschuler, Simantz & Hem, LLC in Aurora. The Company is pleased to have someone of Bieber's quality join the Board of Directors.

Sharon Covert, who has served on the Princeton National Bancorp, Inc. Board of Directors since 2001, was appointed to serve on the Citizens First National Bank Board of Directors. Covert will fill the vacancy created by Thomas Longman's retirement. Covert is a successful businesswoman, has been actively involved in the promotion of agriculture at the local, state, and national level, and is currently on the Board of Directors of the United Soybean Board. The subsidiary bank is pleased to have her expertise on the Board of Directors.

Total interest income decreased 4.4% during 2008; however, total interest expense decreased 20.9%. The Company focused on reducing interest expense and improving net interest income. The end result, a 16.5% increase in net interest income to $31.521 million, compared to $27.054 million in 2007. The net interest margin experienced steady improvement throughout the year resulting in a 7.5% increase to 3.44%, up from 3.20% in 2007.

Non-interest income was $11.593 million compared to $11.298 million in 2007. The Company's non-interest income was 1.05% of average assets for the year 2008. Non-interest expense remains well controlled and represents 2.81% of total assets compared to 2.85% in 2007.

Princeton National Bancorp, Inc. also reached a record level of total assets at $1.163 billion as of December 31, 2008. This represents growth of 7.6% when compared to total assets at December 31, 2007 of $1.081 billion. The Company's loan portfolio grew $68.2 million over the last twelve months. During 2008, the Company generated $113.6 million in mortgage loans compared to $97.3 million in 2007. The subsidiary bank underwrites all fixed mortgages to secondary market standards and sells them. With the reduction in mortgage interest rates, mortgage loan volume has increased and the Company currently has $30 million in its pipeline. The Company's loan charge-offs during the year totaled .16% of total average loans, higher than historic levels but well below Princeton's peers. Non-performing loans were 4.18% of the total loan portfolio at December 31, 2008. The majority of the non-performing loans (55%) are concentrated in three credits, and current appraisals indicate all three credits are adequately secured. The Company's charge-offs have historically been lower than its peers, so the loan loss reserve was also lower. Due to the strong loan growth in 2008 and given the uncertain global and national economic conditions, Management decided to infuse a large provision into the allowance for possible loan and lease losses. Therefore, the provision expense for 2008 was methodically increased to $2.968 million, compared to $640,000 in 2007. The allowance for loan losses now represents .64% of total loans at December 31, 2008, compared to .45% at December 31, 2007. Even with the record provision, during 2008 the subsidiary bank generated the highest earnings in its 144-year history.

The Company ended 2008 with total deposits and repurchase agreements of $997.7 million, an increase of 7.8% from $925.6 million at year-end 2007.

During 2008, the Company purchased 20,000 shares under the Stock Repurchase Plans at an average price of $27.69 per share. Since 1997, the Company has repurchased 1,364,271 shares of common stock through stock repurchase programs.

The stock price closed the year at $22.14, a decrease from the December 31, 2007 stock price of $24.25. The decrease in Princeton's stock price is reflective of the banking industry as a whole.

The Company has set its annual meeting date for April 28, 2009 at 10:00 A.M. at The Galleria Convention Center in Princeton, Illinois. The record date for the Annual Meeting will be February 27, 2009.

Princeton National Bancorp, Inc. has no sub-prime loans in its loan portfolio or as underlying collateral in the investment portfolio and does not own Fannie Mae or Freddie Mac preferred stock. For additional financial information, please refer to the attached December 31, 2008 financial statements for Princeton National Bancorp, Inc. You may also visit our website at [ www.pnbc-inc.com ] to obtain financial information, as well as press releases, stock prices and information on the Company.

The Company offers shareholders the opportunity to participate in the Princeton National Bancorp, Inc. Dividend Reinvestment and Stock Purchase Plan. The Company also offers electronic direct deposit of dividends. To obtain information about the stock purchase plan or electronic direct deposit, please contact us at 815-875-4445, extension 650.

Princeton National Bancorp, Inc. is the parent holding company of Citizens First National Bank, a $1.163 billion community bank with strategic locations in 8 counties in northern Illinois. The Company is well-positioned in the high-growth counties of Will, Kendall, Kane, Grundy, DeKalb and LaSalle plus Bureau and Marshall. Communities include: Aurora, DePue, Genoa, Hampshire, Henry, Huntley, Millbrook, Minooka, Newark, Oglesby, Peru, Plainfield, Plano, Princeton, Sandwich, Somonauk and Spring Valley. The Subsidiary Bank, Citizens First National Bank, provides financial services to meet the needs of individuals, businesses and public entities.

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 the audited results.

 Princeton National Bancorp, Inc. CONSOLIDATED BALANCE SHEETS (dollars in thousands, except share data) December 31, December 31, 2008 2007 (unaudited) ----------- ----------- ASSETS Cash and due from banks $ 17,487 $ 25,801 Interest-bearing deposits with financial institutions 2,774 1,803 Federal funds sold 0 0 ----------- ----------- Total cash and cash equivalents 20,261 27,604 Loans held for sale, at lower of cost or market 2,155 928 Investment securities available-for-sale, at fair value 236,883 218,095 Investment securities held-to-maturity, at amortized cost 18,443 14,578 ----------- ----------- Total investment securities 255,326 232,673 Loans, net of unearned interest 790,837 722,647 Allowance for loan losses (5,064) (3,248) ----------- ----------- Net loans 785,773 719,399 Premises and equipment, net 30,307 30,801 Land held for sale, at lower of cost or market 1,344 1,344 Bank-owned life insurance 21,588 22,461 Interest receivable 9,693 10,876 Goodwill, net of accumulated amortization 24,521 24,521 Intangible assets, net of accumulated amortization 4,207 5,090 Other real estate owned 2,487 833 Other assets 5,468 4,172 ----------- ----------- TOTAL ASSETS $ 1,163,130 $ 1,080,702 =========== =========== LIABILITIES Demand deposits $ 110,559 $ 102,452 Interest-bearing demand deposits 246,714 241,749 Savings deposits 61,089 58,401 Time deposits 543,770 488,805 ----------- ----------- Total deposits 962,132 891,407 Customer repurchase agreements 35,532 34,217 Advances from the Federal Home Loan Bank 32,493 6,984 Interest-bearing demand notes issued to the U.S. Treasury 2,441 1,838 Federal funds purchased 6,500 26,500 Trust Preferred securities 25,000 25,000 Note payable 16,050 14,550 ----------- ----------- Total borrowings 118,016 109,089 Other liabilities 10,511 11,599 ----------- ----------- Total liabilities 1,090,659 1,012,095 ----------- ----------- STOCKHOLDERS' EQUITY Common stock 22,391 22,391 Surplus 18,420 18,275 Retained earnings 54,329 51,279 Accumulated other comprehensive income (loss), net of tax 1,402 344 Less: Treasury stock (24,071) (23,682) ----------- ----------- Total stockholders' equity 72,471 68,607 ----------- ----------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,163,130 $ 1,080,702 =========== =========== CAPITAL STATISTICS (UNAUDITED) YTD average equity to average assets 6.25% 6.33% Tier 1 leverage capital ratio 5.98% 6.16% Tier 1 risk-based capital ratio 7.71% 8.00% Total risk-based capital ratio 8.30% 8.41% Book value per share $ 21.97 $ 20.74 Closing market price per share $ 22.14 $ 24.25 End of period shares outstanding 3,298,041 3,308,447 End of period treasury shares outstanding 1,180,254 1,169,848 

 Princeton National Bancorp, Inc. 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, 2008 31, 2007 31, 2008 31, 2007 (unaudited) (unaudited) (unaudited) (unaudited) ---------- ---------- ---------- ---------- INTEREST INCOME Interest and fees on loans $ 11,586 $ 13,101 $ 47,715 $ 49,982 Interest and dividends on investment securities 2,872 2,652 10,982 11,124 Interest on federal funds sold 5 86 71 332 Interest on interest-bearing time deposits in other banks 8 37 54 121 ---------- ---------- ---------- ---------- Total Interest Income 14,471 15,876 58,822 61,559 ---------- ---------- ---------- ---------- INTEREST EXPENSE Interest on deposits 5,532 7,546 23,782 30,324 Interest on borrowings 861 1,105 3,519 4,181 ---------- ---------- ---------- ---------- Total Interest Expense 6,393 8,651 27,301 34,505 ---------- ---------- ---------- ---------- Net interest income 8,078 7,225 31,521 27,054 Provision for loan losses 1,600 90 2,968 640 ---------- ---------- ---------- ---------- Net interest income after provision 6,478 7,135 28,553 26,414 ---------- ---------- ---------- ---------- NON-INTEREST INCOME Trust & farm management fees 410 382 1,530 1,507 Service charges on deposit accounts 1,032 1,173 4,408 4,431 Other service charges 550 473 2,137 1,966 Gain on sales of securities available-for-sale 74 183 405 541 Brokerage fee income 237 279 913 920 Mortgage banking income 190 237 1,069 903 Bank-owned life insurance 226 208 874 816 Other operating income 118 61 257 214 ---------- ---------- ---------- ---------- Total Non-Interest Income 2,837 2,996 11,593 11,298 ---------- ---------- ---------- ---------- NON-INTEREST EXPENSE Salaries and employee benefits 4,611 4,300 17,692 16,874 Occupancy 651 623 2,559 2,393 Equipment expense 828 788 2,996 3,158 Federal insurance assessments 578 83 845 338 Intangible assets amortization 178 176 714 704 Data processing 300 304 1,151 1,101 Advertising 218 183 742 722 Other operating expense 1,063 1,055 4,424 4,275 ---------- ---------- ---------- ---------- Total Non-Interest Expense 8,427 7,512 31,123 29,565 ---------- ---------- ---------- ---------- Income before income taxes 888 2,619 9,023 8,147 Income tax expense (139) 571 1,697 1,377 ---------- ---------- ---------- ---------- Net income $ 1,027 $ 2,048 $ 7,326 $ 6,770 ========== ========== ========== ========== Net income per share: BASIC $ 0.31 $ 0.62 $ 2.22 $ 2.04 DILUTED $ 0.31 $ 0.62 $ 2.22 $ 2.03 Basic weighted average shares outstanding 3,296,743 3,310,487 3,297,990 3,326,467 Diluted weighted average shares outstanding 3,301,233 3,316,573 3,306,195 3,334,507 PERFORMANCE RATIOS (annualized) Return on average assets 0.36% 0.77% 0.66% 0.65% Return on average equity 5.90% 12.18% 10.59% 10.32% Net interest margin (tax-equivalent) 3.38% 3.29% 3.44% 3.20% Efficiency ratio (tax-equivalent) 73.21% 69.69% 68.66% 72.72% ASSET QUALITY Net loan charge-offs $ 378 $ 64 $ 1,151 $ 445 Total non-performing loans $ 33,038 $ 7,434 $ 33,038 $ 7,434 Non-performing loans as a % of total loans 4.18% 1.03% 4.18% 1.03%