Princeton National Bancorp, I (PNBC)

[Enterprising Investor]

PNBC Releases 2011 Results (3/30/12)

PRINCETON, IL--(Marketwire - Mar 30, 2012) - Princeton National Bancorp, Inc. (the "Corporation" or "PNBC") (NASDAQ: PNBC), parent corporation of Citizens First National Bank (the "Bank"), ended the year with a net loss available to common stockholders of $49.6 million, or $(14.89) per common share on a fully diluted basis. The Corporation recorded loan loss provision of $46.0 million in 2011 to resolve problem loan assets that are materially impacting the Corporation's wholly-owned subsidiary, Citizens First National Bank. At the end of 2010 and throughout 2011, a credit administration division was created at the Bank to help proactively identify and address the Bank's loan portfolio challenges, and help pave the way for a return to a more normal loan loss provision level.

Net income available to common stockholders, on a pre-tax, pre-provision basis, was $4.3 million at year-end 2011 compared to $10.4 million at year-end 2010. This decline is due to an increase in loan collection expenses and continuing write-downs of assets placed in other real estate owned.

The net interest margin for 2011 was a strong 4.08%, as compared to 3.98% for 2010. The Bank was able to increase the net interest margin during 2011 despite 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 grew to $12.8 million in 2011, from $11.5 million in 2010. In 2011, non-interest income was positively impacted by increased gains from the sales of securities, an increase in service charges on deposits, and negatively impacted by a mortgage impairment write-down of $817,000.

Net loan charge-offs grew from $22.9 million in 2010 to $46.4 million in 2011 due to a proactive charge-off stance, which was the result of the Bank's focus on problem loan identification and resolution. We anticipate that these aggressive tactics will assist in stabilizing the Bank's charge-offs with the goal to have them decline significantly.

Total assets at December 31, 2011 decreased to $1.020 billion from $1.096 billion at December 31, 2010. Total net loan balances decreased by $77.9 million during the twelve month period to $596.5 million due to seasonal pay downs in the agricultural portfolio, non-performing loans being transferred into OREO, and a general decline in the overall demand for new low-risk credit. Deposits totaled $917.3 million, down from $963.0 million in 2010, reflecting managed efforts to reduce deposit levels to positively impact capital ratios. The Bank benefitted from a very low cost of funds in 2011, while maintaining consistent funding levels and increased levels of liquidity. The balance sheet reduction strategy did not impact the Bank's core customer base and was managed via slightly lower CD rates and high-yield money market rates, while seizing appropriate opportunities to lower higher cost public and non-public deposits.

Stockholders' equity was $11.0 million at year-end 2011, compared to $56.9 million in 2010. At December 31, 2011, the Bank's tier-one leverage, tier one and total risk-based capital ratios were 2.71%, 4.15% and 5.44%, respectively.

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. Actions have been implemented to ensure that an adequate loan loss allowance and workout plan for substandard loans is maintained and to improve the loan risk rating system.

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.

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.

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