EX-99.1 3 k48998exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(PRINCETON NATIONAL BANCORP, INC. LOGO)
Princeton National Bancorp, Inc.
Releases 4th Quarter 2009 Results
PRINCETON, Illinois, March 15, 2010: 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 it’s 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     Diluted EPS  
    December 31, 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.
Inquiries should be directed to:
Lou Ann Birkey, Vice President- Investor Relations
Princeton National Bancorp, Inc. (815) 875-4444
E-Mail address: pnbc@citizens1st.com

 


 

(PRINCETON NATIONAL BANCORP, INC. LOGO)
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
                 
    December 31,      
    2009     December 31,  
    (unaudited)     2008  
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  

 


 

(PRINCETON NATIONAL BANCORP, INC. LOGO)
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share data)
                                 
    THREE MONTHS     THREE MONTHS     TWELVE MONTHS     TWELVE MONTHS  
    ENDED     ENDED     ENDED     ENDED  
    December 31, 2009     December 30, 2008     December 31, 2009     December 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 %