PNBC Releases Third Quarter Results (11/10/11)
PRINCETON, IL--(Marketwire - Nov 10, 2011) - Princeton National Bancorp, Inc. (the "Corporation") (NASDAQ: PNBC), parent corporation of Citizens First National Bank ("Subsidiary Bank"), announced a net loss available to common stockholders for the third quarter of 2011 of $19,146,000 or $(5.75) per basic and diluted common share ("EPS"), compared to a loss of $2,232,000 or $(0.67) EPS in the third quarter of 2010. The net loss was caused by the recording of a net deferred tax asset valuation allowance of $14,584,000; a provision for loan losses expense of $7,975,000 (resulting from the continued collateral de-valuation in troubled real estate markets); increasing costs to carry and manage other real estate owned properties of $853,000; and recognition of an impairment on originated mortgage servicing rights of $817,000 due to the historically low interest rate environment.
During the third quarter, the Corporation recorded a valuation allowance for its net deferred tax asset due to the losses experienced over the last three years as well as revised downward earnings forecasts in the immediate future from the acceleration of provision for loan losses and loan collection and other real estate owned expenses. Therefore, as of September 30, 2011, the carrying value of the Corporation's net deferred tax assets was reduced to $0.00 through the recognition of a $14,584,000 valuation allowance. Each quarter the Corporation will evaluate whether the current conditions support a change in the valuation allowance against deferred tax assets. Any reduction in the estimated valuation allowance in future quarters would lower the amount of income tax expense recognized by the Corporation.
Non-performing loans amounted to 14.51% of total loans at September 30, 2011 compared to 13.83% at December 31, 2010. This increase reflects continued stress on the commercial real estate market, primarily from persistent economic issues and their impact on consumer spending and the housing industry. The provision for loan loss expense recorded each quarter is determined by management's evaluation of the risk characteristics of the loan portfolio. The Corporation recorded a provision for loan loss of $7,975,000 in the third quarter of 2011 compared to $6,725,000 in the third quarter of 2010.
"The aggressive identification and resolution of problem loans remains an ongoing effort," stated Thomas D. Ogaard, President & CEO. "It is expected that these aggressive tactics will be beneficial in shortening the timeframe to when the Bank can return to a more normalized operating environment."
Net charge-offs increased during the third quarter of 2011 to $10,593,000, compared to net charge-offs of $4,147,000 for the third quarter of 2010. The Corporation's net charge-offs have grown and remain high due to the continued downward pressure on real estate values, particularly development properties. The growth trends in charge-offs and corresponding provision for loan losses are expected to begin to diminish due to the Corporation's aggressive efforts to identify and resolve problem loans and as signs of economic stabilization begin to appear in the commercial real estate market.
Princeton National Bancorp, Inc.'s net interest income before the provision for loan losses was $8,365,000 for the third quarter of 2011, compared to $9,245,000 for the third quarter of 2010 due to a decrease in the average interest-earning base of $113.5 million. The net interest margin decreased to 3.92% in the third quarter of 2011 from 4.14% in the third quarter of 2010, from 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 totaled $2,089,000 in the third quarter of 2011, compared to $2,474,000 in the third quarter of 2010. This decrease was primarily due to the recognition of impairment on originated mortgage servicing rights of $817,000 in the third quarter of 2011 compared to impairment of $333,000 in the third quarter of 2010. Annualized non-interest income as a percentage of total average assets decreased to 0.77% for the third quarter of 2011, from 0.87% for the same period in 2010.
Total non-interest expense for the third quarter of 2011 was $10,089,000, an increase from $9,047,000 in the third quarter of 2010. The primary difference between the two quarters was an increase in expenses related to other real estate owned of $407,000, due to updated property valuations, and an increase in loan collection expenses of $459,000. Annualized non-interest expense as a percentage of total average assets increased to 3.72% for the third quarter of 2011, compared to 3.19% for the same period in 2010.
Stockholders' equity as of September 30, 2011 decreased to $39,184,000 from $56,861,000 at December 31, 2010. Total stockholders' equity to total assets at September 30, 2011 decreased to 3.66% from 5.19% at December 31, 2010.
On October 27, 2011, the Corporation entered into a Written Agreement with the Federal Reserve Bank (the "FRB"). The Corporation has taken steps to address the issues raised in the Written Agreement and intends to fully comply with the requirements set forth. For details on the Written Agreement please refer to the Form 8-K which was filed on November 2, 2011.
Princeton National Bancorp, Inc., through its wholly owned subsidiary Citizens First National Bank, operates community banking offices with strategic locations in 8 counties in northern Illinois. Total assets at September 30, 2011 decreased to $1.070 billion from $1.096 billion at December 31, 2010. Total loan balances decreased by $65.5 million during the nine month period to $638.6 million due to seasonal pay downs in the agricultural portfolio and general decline in the overall demand for new low-risk credit. The decrease in assets reflects the Corporation's 2011 capital management objectives.
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.
