PNBC Princeton National Bancorp Inc (CE)

Princeton National Bancorp, Inc. (NASDAQ:PNBC) President Tony J. Sorcic announced today, "Princeton National Bancorp, Inc. reported record net income for the third quarter of $2.039 million, or fully diluted earnings per share of $.62, with a return on average equity of 13.71%. In comparing the third quarter of 2005 to the second quarter of 2005, net income increased 20.4%, fully diluted earnings per share increased 12.7%, and the return on average equity increased 5.3%. The acquisition of Somonauk FSB Bancorp, Inc. was accretive to earnings." Sorcic continued, "On July 31, 2005, the Company completed the acquisition of Somonauk FSB Bancorp, Inc. Somonauk's subsidiary bank, Farmers State Bank, was immediately merged into Princeton National Bancorp, Inc.'s subsidiary bank, Citizens First National Bank. The Company's subsidiary bank now has 20 locations to serve customers. I have had the opportunity to meet many of our new customers and everyone has been very accepting of the changes. We are very pleased with the response from our new communities." Chairman Craig Wesner noted, "Somonauk has been a high-performing company and the Somonauk offices are located in the middle of our marketing area. These new offices have greatly enhanced the Company's market share and visibility. The combination of these two fine staffs benefits all of the communities served by the subsidiary bank. The staff has done an outstanding job transitioning the systems of the Farmers State Bank offices. All staff members continue to do what they do best - serve our customers and our communities." The Company experienced record growth over the last twelve months. Total assets at September 30, 2005 of $927,529,000 increased 48.1%, total loans of $565,744,000 increased 42.9% and total deposits of $784,170,000 increased 43.6%. These outstanding results were achieved due to loan growth of $55,752,000, the addition of Somonauk's loan portfolio of $113,966,000, deposit growth of $45,398,000, and the addition of Somonauk's deposit portfolio of $192,792,000. The ratio of non-performing loans to total loans at September 30, 2005 of 0.44% is down from 0.47% at June 30, 2005 and up from 0.12% at September 30, 2004. Net loan charge-offs as of September 30, 2005 were $28,000 compared to $82,000 for the same period in 2004. The net charge-offs and non-performing loans continue to be well below industry averages. PNBC has not recorded a loan loss provision in first nine months of 2005, however the allowance for loan losses has increased as a result of the acquisition. The Company has a high-quality loan portfolio, a low level of non-performing loans and minimal net charge-offs. In comparing the third quarter of 2005 to the second quarter of 2005, total other income increased 12.7%. Increases were experienced in service charges on deposits, income from bank-owned life insurance and brokerage fee income. When measuring the third quarter of 2005 to the third quarter of 2004, total other income increased 20.8%. Additional income was generated in trust and farm management fees, service charges on deposits, other service charges, brokerage fees and mortgage banking income. When comparing the first nine months of 2005 to the same period in 2004, net income increased 5.0% to $5.439 million and the return on average equity decreased 2.1% to 13.34%. Contributing to the 2004 results was the sale of the Company's credit card portfolio, which generated income of $285,000 after tax, and gains on the sales of securities of $182,000, compared to $50,000 for the same period in 2005. The acquisition of Somonauk FSB Bancorp, Inc. on July 31, 2005 had a positive impact on the above results. The PNBC stock price reached a high of $34.00 during the third quarter and closed at $34.00 on September 30, 2005. During the third quarter, the Company repurchased 17,000 shares of common stock at an average price of $33.52. The Company will continue to repurchase shares in the open market or in private transactions to complete the 100,000 Share Repurchase Program which was announced in January of 2005. Purchases will be dependent upon market conditions and the availability of shares. Since 1997, the Company has repurchased 1,218,871 shares of common stock through stock repurchase programs. Construction of the facility in Aurora, Illinois should be completed and the facility opened in the spring of 2006. The Aurora/Oswego area is growing rapidly and Princeton National Bancorp, Inc. is very excited about opportunities in this market area. It is anticipated plans for the Elburn, Illinois office will begin in the fourth quarter of 2006. Princeton National Bancorp, Inc. is a $928 million community bank with locations throughout northern Illinois, several of which are in high-growth markets and two additional locations (Aurora and Elburn) which will also be built in high-growth markets. These communities include: Huntley, Hampshire, Minooka, Sandwich, Somonauk, Plano, Genoa, Millbrook, Newark, Peru, Princeton, Henry, Oglesby, Spring Valley and DePue. 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. -0- *T CONSOLIDATED BALANCE SHEETS (dollars in thousands, except share data) September 30, 2005 December 31, (unaudited) 2004 ------------- ------------ ASSETS Cash and due from banks $17,771 $14,025 Interest-bearing deposits with financial institutions 288 65 Federal funds sold 500 0 ------------- ------------ Total cash and cash equivalents 18,559 14,090 Loans held for sale, at lower of cost or market 1,882 1,301 Investment securities available-for-sale, at fair value 238,093 175,129 Investment securities held-to-maturity, at amortized cost 21,366 13,680 ------------- ------------ Total investment securities 259,459 188,809 Loans, net of unearned interest 565,744 410,044 Allowance for loan losses (3,336) (2,524) ------------- ------------ Net loans 562,408 407,520 Premises and equipment, net 22,801 17,924 Bank-owned life insurance 20,515 15,870 Interest receivable 8,898 5,000 Goodwill, net of accumulated amortization 22,332 1,355 Intangible assets, net of accumulated amortization 7,126 1,317 Other real estate owned 532 0 Other assets 3,017 2,552 ------------- ------------ TOTAL ASSETS $927,529 $655,738 ============= ============ ---------------------------------------------------------------------- LIABILITIES Demand deposits $82,264 $75,015 Interest-bearing demand deposits 240,849 191,271 Savings deposits 107,268 58,675 Time deposits 353,789 248,600 ------------- ------------ Total deposits 784,170 573,561 Customer repurchase agreements 28,866 16,870 Advances from the Federal Home Loan Bank 9,341 5,000 Interest-bearing demand notes issued to the U.S. Treasury 2,411 1,765 Federal funds purchased 0 1,000 Trust Preferred securities 25,000 0 Note payable 6,700 900 ------------- ------------ Total borrowings 72,318 25,535 Other liabilities 7,857 4,273 ------------- ------------ Total liabilities 864,345 603,369 ------------- ------------ STOCKHOLDERS' EQUITY Common stock 22,392 20,699 Surplus 16,944 7,810 Retained earnings 44,926 42,156 Accumulated other comprehensive income (loss), net of tax (39) 951 Less: Treasury stock (21,039) (19,247) ------------- ------------ Total stockholders' equity 63,184 52,369 ------------- ------------ TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $927,529 $655,738 ============= ============ CAPITAL STATISTICS (UNAUDITED) YTD average equity to average assets 7.48% 8.24% Tier 1 leverage capital ratio 7.05% 7.62% Tier 1 risk-based capital ratio 10.59% 10.94% Total risk-based capital ratio 11.19% 11.49% Book value per share $18.80 $17.13 Closing market price per share $34.00 $28.80 End of period shares outstanding 3,360,036 3,058,000 End of period treasury shares outstanding 1,118,260 1,081,841 CONSOLIDATED STATEMENTS OF INCOME (unaudited) (dollars in thousands, except share data) THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS ENDED ENDED ENDED ENDED Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2005 2004 2005 2004 ------------ ------------ ----------- ----------- INTEREST INCOME Interest and fees on loans $8,547 $5,900 $21,609 $17,414 Interest and dividends on investment securities 2,419 1,530 5,838 4,549 Interest on federal funds sold 65 2 75 8 Interest on interest- bearing time deposits in other banks 34 2 43 6 ------------ ------------ ----------- ----------- Total Interest Income 11,065 7,434 27,565 21,977 ------------ ------------ ----------- ----------- INTEREST EXPENSE Interest on deposits 3,866 2,114 9,098 6,278 Interest on borrowings 673 116 1,072 321 ------------ ------------ ----------- ----------- Total Interest Expense 4,539 2,230 10,170 6,599 ------------ ------------ ----------- ----------- Net interest income 6,526 5,204 17,395 15,378 Provision for loan losses 0 75 0 375 ------------ ------------ ----------- ----------- Net interest income after provision 6,526 5,129 17,395 15,003 ------------ ------------ ----------- ----------- NON-INTEREST INCOME Trust & farm management fees 364 343 1,192 1,045 Service charges on deposit accounts 936 845 2,416 2,377 Other service charges 357 278 953 877 Gain on sales of securities available-for-sale 21 0 50 182 Gain on sale of loans 0 0 0 465 Brokerage fee income 212 135 504 513 Mortgage banking income 198 123 527 406 Bank-owned life insurance 169 137 444 420 Other operating income 38 39 120 124 ------------ ------------ ----------- ----------- Total Non-Interest Income 2,295 1,900 6,206 6,409 ------------ ------------ ----------- ----------- NON-INTEREST EXPENSE Salaries and employee benefits 3,621 2,770 9,608 8,228 Occupancy 428 354 1,105 1,018 Equipment expense 494 398 1,418 1,188 Federal insurance assessments 63 55 179 174 Intangible assets amortization 81 52 185 156 Data processing 202 187 605 556 Advertising 218 191 536 523 Other operating expense 1,095 880 2,861 2,667 ------------ ------------ ----------- ----------- Total Non-Interest Expense 6,202 4,887 16,497 14,510 ------------ ------------ ----------- ----------- Income before income taxes 2,619 2,142 7,104 6,902 Income tax expense 580 509 1,665 1,719 ------------ ------------ ----------- ----------- Net income $2,039 $1,633 $5,439 $5,183 ============ ============ =========== =========== Net income per share: BASIC $0.63 $0.53 $1.75 $1.67 DILUTED $0.62 $0.52 $1.73 $1.64 Basic weighted average shares outstanding 3,252,157 3,074,308 3,114,303 3,098,357 Diluted weighted average shares outstanding 3,283,682 3,127,810 3,139,371 3,167,894 PERFORMANCE RATIOS (annualized) Return on average assets 0.94% 1.05% 1.00% 1.13% Return on average equity 13.71% 12.76% 13.34% 13.63% Net interest margin (tax-equivalent) 3.65% 3.94% 3.80% 3.95% Efficiency ratio (tax-equivalent) 66.01% 65.22% 65.98% 63.32% ASSET QUALITY Net loan charge-offs $6 ($22) $28 $82 Total non-performing loans $2,514 $494 $2,514 $494 Non-performing loans as a % of total loans 0.44% 0.12% 0.44% 0.12% *T