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Princeton National Bancorp, Inc. Releases 3rd Quarter 2009 Results

^{Published on 2009-10-30 13:50:14 - Market Wire}
 

PRINCETON, IL--(Marketwire - October 30, 2009) - Princeton National Bancorp, Inc., (NASDAQ: [ PNBC ]), the holding company of Citizens First National Bank, today reported results of operations and financial condition for the third quarter of 2009.

Net income for the third quarter of 2009 was $760,000 as compared to $1,898,000 in the second quarter of 2009. Net income available to common stockholders was $440,000, or $0.13 per diluted share, for the quarter ended September 30, 2009, compared to net income available to common stockholders of $1,575,000, or $0.48 earnings per diluted common share, recorded in the second quarter of 2009. In comparison to the third quarter of 2008, earnings per diluted common share decreased $0.53 and net income available to common stockholders decreased $1,747,000. The lower net income is attributable to an increase in the loan loss provision and insurance assessments by the FDIC.

President & CEO Tony J. Sorcic stated, "The country continues to be in a severe recession. Credit quality continues to weaken across the nation, resulting in financial institutions building their loan loss provisions. The decline in collateral values continues in the housing market and the national average unemployment rate rose in September 2009 to 9.8%. Unfortunately, in the State of Illinois the unemployment rate is higher than the national average and has risen to 10.5%, significantly higher than the average of 7.2% reported by the State of Illinois at the end of 2008."

Mr. Sorcic concluded, "Unlike many institutions in the banking industry, the Company continues to experience growth in its balance sheet and generate positive earnings. In comparing September 30, 2009 to September 30, 2008, total deposits increased $127.4 million, total loans increased $10.1 million, net interest income increased $2.464 million, and non-interest income increased $337,000. The net interest margin for the first nine months was 3.45%, down 1 basis point from the same period in 2008. Non-interest expense increased $3.781 million; which represents a minimal increase in core operating expenses when you consider federal insurance assessments increased $1.822 million and other real estate expenses increased $670,000."

Net-interest income for the third quarter of 2009 (before provision) was $8.883 million and non-interest income was $2.772 million, compared to $8.629 million and $3.731 million, respectively, for the second quarter of 2009 and $8.172 million and $2.851 million, respectively, for the third quarter of 2008. Return on average equity was 3.02% for the third quarter 2009, compared to 7.77% for the second quarter 2009 and 12.54% for the third quarter of 2008.

Total assets ended the quarter at $1.287 billion, up 2.3%, or 9.2% annualized, from $1.258 billion at June 30, 2009 and 10.7% from $1.163 billion at December 31, 2008. Princeton National Bancorp, Inc. experienced a $6.5 million increase and in total loans as of September 30, 2009 compared to June 30, 2009 and an $18.6 million decrease compared to December 31, 2008, respectively (due to a general slowdown in the economy and the refinancing of adjustable rate real estate loans into fixed rate products which are sold into the secondary market).

Princeton National Bancorp, Inc. recorded a loan loss provision of $2.410 million during the quarter, compared to $1.465 million in the second quarter and $550,000 in the third quarter of 2008. During the first nine months, the Company has recorded a loan loss provision of $5.045 million versus $1.368 million for the same period in 2008, due to the increase in non-performing loans. Although the loan charge-offs during 2009 remain extremely low at $2.350 million, or .40% of total loans, non-performing loans increased $5.5 million to $38.5 million compared to $33.0 million as of December 31, 2008. At the end of the third quarter, specific loss provisions for individual credits totaled $1.359 million, compared to $1.530 million at June 30, 2009 and $818,000 at December 31, 2008. Citizens First National Bank evaluates the risk characteristics of the loan portfolio on a monthly basis and believes the loan loss reserve is adequate to cover estimated losses as of September 30, 2009. The Subsidiary Bank staff will continue to work with borrowers to resolve problem loan situations and to work through this challenging credit cycle. Recognizing this, and reflective of current conditions, the level of loan loss provisioning has increased, bringing the level of reserves to 1.00% of total loans, an increase from .64% at December 31, 2008 and .50% at September 30, 2008.

The Board of Directors declared a $.14 per common share dividend payable December 7, 2009 to those shareholders of record as of November 16, 2009. This represents the Company's 99th consecutive dividend.

On September 29, 2009, the FDIC adopted a Notice of Proposed Rulemaking that would require insured institutions to prepay their estimated quarterly risk-based assessments for the fourth quarter of 2009, and all of 2010, 2011, and 2012. The Corporation estimates the amount of the prepaid assessment to be approximately $6 million. The FDIC also announced a uniform 3-basis point increase in the risk-based assessment effective January 1, 2011, which will bring the Company's assessment rate to 20 basis points.

The Company's solid capital base and ability to generate core earnings continue to be an advantage as we work through the current credit cycle. The Subsidiary Bank has been providing financial solutions to meet the financial needs of its customers since 1865. Princeton National Bancorp, Inc. and Citizens First National Bank continue to focus on positioning themselves to benefit as conditions improve.

The price of PNBC stock closed at $15.75 on September 30, 2009, compared to $14.60 on June 30, 2009, $14.00 on March 31, 2009 and $22.14 on December 31, 2008. Financial stocks continue to be impacted by poor earnings reports by many institutions, due to the current credit cycle. Princeton National Bancorp, Inc. has reported positive quarterly earnings for fifty-eight consecutive quarters!

For detailed financial information, please refer to the attached September 30, 2009 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 $1.287 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.

 CONSOLIDATED BALANCE SHEETS (dollars in thousands, except share data) September 30, 2009 December 31, (unaudited) 2008 ----------- ----------- ASSETS Cash and due from banks $ 15,332 $ 20,163 Interest-bearing deposits with financial institutions 49,690 98 Federal funds sold 0 0 ----------- ----------- Total cash and cash equivalents 65,022 20,261 Loans held for sale, at lower of cost or market 5,484 2,155 Investment securities available-for-sale, at fair value 320,978 236,883 Investment securities held-to-maturity, at amortized cost 14,984 14,232 ----------- ----------- Total investment securities 335,962 251,115 Loans, net of unearned interest 772,208 790,837 Allowance for loan losses (7,759) (5,064) ----------- ----------- Net loans 764,449 785,773 Premises and equipment, net 28,563 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 22,308 21,588 Interest receivable 9,543 9,693 Goodwill, net of accumulated amortization 24,521 24,521 Intangible assets, net of accumulated amortization 3,560 4,207 Other real estate owned 16,182 2,487 Other assets 4,881 5,468 ----------- ----------- TOTAL ASSETS $ 1,287,059 $ 1,163,130 =========== =========== LIABILITIES Demand deposits $ 110,116 $ 110,559 Interest-bearing demand deposits 337,780 246,714 Savings deposits 65,424 61,089 Time deposits 551,493 543,770 ----------- ----------- Total deposits 1,064,813 962,132 Customer repurchase agreements 50,025 35,532 Advances from the Federal Home Loan Bank 32,498 32,493 Interest-bearing demand notes issued to the U.S. Treasury 790 2,441 Federal funds purchased 0 6,500 Trust Preferred securities 25,000 25,000 Note payable 0 16,050 ----------- ----------- Total borrowings 108,313 118,016 Other liabilities 10,921 10,511 ----------- ----------- Total liabilities 1,184,047 1,090,659 ----------- ----------- STOCKHOLDERS' EQUITY Preferred stock 24,951 0 Common stock 22,391 22,391 Common stock warrants 150 0 Additional paid-in capital 18,417 18,420 Retained earnings 55,575 54,329 Accumulated other comprehensive income (loss), net of tax 5,505 1,402 Less: Treasury stock (23,977) (24,071) ----------- ----------- Total stockholders' equity 103,012 72,471 ----------- ----------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,287,059 $ 1,163,130 =========== =========== CAPITAL STATISTICS (UNAUDITED) YTD average equity to average assets 7.79% 6.25% Tier 1 leverage capital ratio 7.79% 6.22% Tier 1 risk-based capital ratio 10.63% 7.72% Total risk-based capital ratio 11.51% 8.30% Common book value per share $ 23.63 $ 21.97 Closing market price per share $ 15.75 $ 22.14 End of period shares outstanding 3,303,563 3,298,041 End of period treasury shares outstanding 1,174,732 1,180,254 CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except share data) THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS ENDED ENDED ENDED ENDED September September September September 30, 30, 30, 30, 2009 2008 2009 2008 (unaudited) (unaudited) (unaudited) (unaudited) ----------- ----------- ----------- ----------- INTEREST INCOME Interest and fees on loans $ 10,951 $ 11,977 $ 33,494 $ 36,129 Interest and dividends on investment securities 3,447 2,772 9,595 8,110 Interest on federal funds sold 0 37 0 66 Interest on interest-bearing time deposits in other banks 25 26 76 46 ----------- ----------- ----------- ----------- Total Interest Income 14,424 14,812 43,164 44,351 ----------- ----------- ----------- ----------- INTEREST EXPENSE Interest on deposits 4,829 5,771 15,079 18,250 Interest on borrowings 712 869 2,178 2,658 ----------- ----------- ----------- ----------- Total Interest Expense 5,540 6,640 17,257 20,908 ----------- ----------- ----------- ----------- Net interest income 8,883 8,172 25,907 23,443 Provision for loan losses 2,410 550 5,045 1,368 ----------- ----------- ----------- ----------- Net interest income after provision 6,473 7,622 20,862 22,075 ----------- ----------- ----------- ----------- NON-INTEREST INCOME Trust & farm management fees 296 309 1,004 1,120 Service charges on deposit accounts 1,050 1,174 3,003 3,376 Other service charges 495 563 1,448 1,587 Gain on sales of securities available-for-sale 38 54 799 331 Brokerage fee income 192 249 639 676 Mortgage banking income 449 243 1,325 879 Bank-owned life insurance 235 227 708 648 Other operating income 17 32 165 138 ----------- ----------- ----------- ----------- Total Non-Interest Income 2,772 2,851 9,092 8,755 ----------- ----------- ----------- ----------- NON-INTEREST EXPENSE Salaries and employee benefits 4,821 4,459 13,514 13,082 Occupancy 640 619 1,952 1,908 Equipment expense 768 698 2,304 2,168 Federal insurance assessments 566 99 2,089 267 Intangible assets amortization 204 178 620 535 Data processing 319 272 974 852 Advertising 170 195 577 524 ORE Expenses, net 312 29 821 151 Other operating expense 1,202 1,079 3,626 3,209 ----------- ----------- ----------- ----------- Total Non-Interest Expense 9,001 7,628 26,477 22,696 ----------- ----------- ----------- ----------- Income before income taxes 244 2,845 3,477 8,134 Income tax expense (516) 658 (338) 1,836 ----------- ----------- ----------- ----------- Net income 760 2,187 3,815 6,298 Preferred stock dividends 313 0 868 0 Accretion of preferred stock discount 7 0 18 0 ----------- ----------- ----------- ----------- Net income available to common stockholders $ 440 $ 2,187 $ 2,929 $ 6,298 =========== =========== =========== =========== Net income per share: BASIC $ 0.13 $ 0.66 $ 0.89 $ 1.91 DILUTED $ 0.13 $ 0.66 $ 0.89 $ 1.90 Basic weighted average shares outstanding 3,302,172 3,295,200 3,300,148 3,298,408 Diluted weighted average shares outstanding 3,302,812 3,305,195 3,300,688 3,309,560 PERFORMANCE RATIOS (annualized) Return on average assets 0.24% 0.78% 0.41% 0.77% Return on average equity 3.02% 12.54% 5.29% 12.17% Net interest margin (tax-equivalent) 3.40% 3.50% 3.45% 3.46% Efficiency ratio (tax-equivalent) 72.41% 66.00% 71.38% 67.11% ASSET QUALITY Net loan charge-offs $ 811 $ 103 $ 2,350 $ 774 Total non-performing loans $ 38,513 $ 16,383 $ 38,513 $ 16,383 Non-performing loans as a % of total loans 4.99% 2.15% 4.99% 2.15%