PNBC Princeton National Bancorp Inc (CE)

Princeton National Bancorp, Inc. (NASDAQ:PNBC) Tony J. Sorcic, President & CEO, announced today, �Total assets of Princeton National Bancorp, Inc. surpassed a record $1 billion on October 11, 2006. The Board of Directors and Management wish to express "Thanks A Billion" to the shareholders, customers and staff for their contributions to this monumental event. Since 1995, total assets of PNBC have increased by just over $600 million. This record level of assets was attained through growth in existing offices, establishing new offices and completing two acquisitions. In the last ten years, the Company has added offices in Hampshire, Huntley, Plano, Aurora, Somonauk, Newark, Sandwich and Millbrook. The Company remains focused on its long-term goal to increase assets and generate a consistent return to its shareholders. The Subsidiary Bank will continue its focus on providing innovative products and the best-quality service to its customers." Sorcic continued, "At the October 23, 2006 meeting, the Board of Directors declared a dividend of $.26 per share, payable November 24, 2006, to those shareholders of record as of November 3, 2006. This represents a 13.0% increase over the November 2005 dividend of $.23 per share and a 4.0% increase over the August 2006 dividend of $.25 per share. This is the Company's 87th consecutive dividend and the dividend has been increased eight out of the last 12 quarters. The Board of Directors also declared a special dividend of $.05 per share payable November 24, 2006 to those shareholders of record as of November 3, 2006. This is the sixth consecutive year the Company has declared a special dividend. Dividends per share for 2006 will total $1.05." Sorcic concluded, "In April 2006, the Company announced a 100,000 share stock repurchase program. The Company purchased 10,000 shares during the third quarter at an average price of $33.50. It is anticipated the remaining shares under the stock repurchase program will be purchased during the fourth quarter of 2006 and first quarter of 2007. Since 1997, the Company has repurchased 1,269,271 shares of common stock through stock repurchase programs." Total assets at September 30, 2006 were $990,364,000, a $47.8 million, or 5.1%, increase compared to June 30, 2006 and a $62.8 million, or 6.8%, increase from September 30, 2005. In comparing total loans for the third quarter of 2006 to the second quarter of 2006, a 2.0% increase was achieved, bringing total loans to $589,906,000. The Company�s loan portfolio continues to be comprised of high-quality loans; net loan charge-offs (.046% annualized) during the first nine months of 2006 were minimal. Total deposits ended the third quarter at $873.4 million (including repurchase agreements), a $43.1 million increase from June 30, 2006 and a $60.4 million increase from September 30, 2005. Although the Company's income continues to be negatively impacted by the net interest margin, net income rose slightly in the third quarter of 2006 to $1,607,000 from $1,581,000 in the second quarter and diluted earnings per share rose to $.47 from $.46. The Return on Average Equity declined somewhat to 9.90%, compared to 9.94% for the second quarter of 2006. Net income for the first nine months of 2006 was $4,838,000, diluted earnings per share were $1.43 and the return on average equity was 10.12%. Net income for the first nine months of 2005 was $5,439,000, diluted earnings per share totaled $1.73 and the return on average equity was 13.34%. The Subsidiary Bank continues to meet expectations on non-interest income and non-interest expense. However, the compressed net interest margin, due to the flat yield curve, continues to negatively impact net income. Non-interest income for the third quarter was $2,564,000, a decrease of 2.9% from $2,640,000 in second quarter of 2006 and an increase of 11.7% from $2,295,000 in the third quarter of 2005. For the twenty-fifth consecutive quarter, the Company�s annualized non-interest income equaled or exceeded 1% of average assets. The Company generated non-interest income of $7,713,000 during the first nine months of 2006, an increase of 24.3% from $6,206,000 for the same period in 2005. Contributing to the improvement were increases in service charges on deposits, gains on the sales of securities available-for-sale, brokerage fee income, mortgage banking income, gains on the sale of mortgage loans, and gain on the sale of the Farm Management Department. The net interest margin (tax equivalent) for the first nine months of 2006 declined to 3.39% versus 3.80% for the same period in 2005. The net interest margin has been negatively impacted by interest rates increasing more rapidly on interest-bearing liabilities than on interest-earning assets, as well as more funds being transferred into certificates of deposit from accounts bearing lower interest rates. The Company has $60.8 million in loans in its Commercial Banking pipeline, which should fund over the next 12 months. We believe these loans, if they are added to the loan portfolio, will have a positive impact on the net interest margin. Also, action plans have been implemented to generate additional non-interest income, increase interest income and reduce interest expense. For additional financial information, please refer to the attached September 30, 2006 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. To obtain information about the plan, please contact us at 815-875-4445, extension 650. Princeton National Bancorp, Inc. is the parent holding company of Citizens First National Bank, a $1.0 billion community bank with strategic locations in 7 counties in northern Illinois. The Company is well-positioned in the high growth counties of Kendall, Kane, Grundy, DeKalb, and LaSalle plus Bureau and Marshall. Communities include: Aurora, DePue, Genoa, Hampshire, Henry, Huntley, Millbrook, Minooka, Newark, Oglesby, Peru, 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. Princeton National Bancorp, Inc. CONSOLIDATED BALANCE SHEETS � � (dollars in thousands, except share data) September 30, 2006� December 31, (unaudited) 2005� � ASSETS � Cash and due from banks $16,115� $23,635� Interest-bearing deposits with financial institutions 6,921� 110� Federal funds sold 16,260� 0� Total cash and cash equivalents 39,296� 23,745� � Loans held for sale, at lower of cost or market 3,864� 2,587� � Investment securities available-for-sale, at fair value 250,734� 235,371� Investment securities held-to-maturity, at amortized cost 16,629� 16,115� Total investment securities 267,363� 251,486� � Loans, net of unearned interest 589,906� 581,724� Allowance for loan losses (3,164) (3,109) Net loans 586,742� 578,615� � Premises and equipment, net 28,121� 26,412� Bank-owned life insurance 21,490� 20,434� Interest receivable 10,314� 8,714� Goodwill, net of accumulated amortization 22,678� 22,665� Intangible assets, net of accumulated amortization 6,152� 6,843� Other real estate owned 440� 468� Other assets 3,904� 3,294� � TOTAL ASSETS $990,364� $945,263� � � � � � LIABILITIES � Demand deposits $89,606� $103,622� Interest-bearing demand deposits 228,717� 222,675� Savings deposits 114,791� 109,491� Time deposits 405,372� 362,770� Total deposits 838,486� 798,558� � Customer repurchase agreements 34,931� 29,375� Advances from the Federal Home Loan Bank 7,364� 8,346� Interest-bearing demand notes issued to the U.S. Treasury 2,486� 2,154� Federal funds purchased 0� 1,000� Trust Preferred securities 25,000� 25,000� Note payable 6,550� 6,700� Total borrowings 76,331� 72,575� � Other liabilities 9,337� 10,986� Total liabilities 924,154� 882,119� � STOCKHOLDERS' EQUITY � Common stock 22,392� 22,392� Surplus 18,025� 16,968� Retained earnings 47,562� 45,786� Accumulated other comprehensive loss, net of tax (129) (482) Less: Treasury stock (21,640) (21,520) Total stockholders' equity 66,210� 63,144� � TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $990,364� $945,263� � � CAPITAL STATISTICS (UNAUDITED) � YTD average equity to average assets 6.77% 7.21% Tier 1 leverage capital ratio 6.63% 6.46% Tier 1 risk-based capital ratio 9.27% 9.26% Total risk-based capital ratio 9.75% 9.76% Book value per share $19.65� $18.87� Closing market price per share $33.00� $33.25� End of period shares outstanding 3,369,245� 3,346,443� End of period treasury shares outstanding 1,109,050� 1,131,853� Princeton National Bancorp, Inc. CONSOLIDATED STATEMENTS OF INCOME (unaudited) (dollars in thousands, except share data) � � THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS ENDED ENDED ENDED ENDED September 30, 2006 September 30, 2005 September 30, 2006 September 30, 2005 � INTEREST INCOME � Interest and fees on loans $10,714� $8,547� $30,559� $21,609� Interest and dividends on investment securities 2,767� 2,419� 7,905� 5,838� Interest on federal funds sold 206� 65� 357� 75� Interest on interest-bearing time deposits in other banks 59� 34� 77� 43� Total Interest Income 13,746� 11,065� 38,898� 27,565� � INTEREST EXPENSE � Interest on deposits 6,397� 3,866� 16,736� 9,098� Interest on borrowings 961� 673� 2,791� 1,072� Total Interest Expense 7,358� 4,539� 19,527� 10,170� � Net interest income 6,388� 6,526� 19,371� 17,395� Provision for loan losses 80� 0� 175� 0� � Net interest income after provision 6,308� 6,526� 19,196� 17,395� � NON-INTEREST INCOME Trust & farm management fees 300� 364� 1,158� 1,192� Service charges on deposit accounts 1,065� 936� 3,166� 2,416� Other service charges 501� 357� 1,336� 953� Gain on sales of securities available-for-sale 98� 21� 158� 50� Gain on sale of loans 0� 0� 90� 0� Brokerage fee income 201� 212� 563� 504� Mortgage banking income 149� 198� 536� 527� Bank-owned life insurance 205� 169� 581� 444� Other operating income 45� 38� 125� 120� Total Non-Interest Income 2,564� 2,295� 7,713� 6,206� � NON-INTEREST EXPENSE Salaries and employee benefits 3,936� 3,621� 11,944� 9,608� Occupancy 523� 428� 1,458� 1,105� Equipment expense 717� 494� 2,138� 1,418� Federal insurance assessments 78� 63� 236� 179� Intangible assets amortization 163� 81� 488� 185� Data processing 194� 202� 781� 605� Advertising 220� 218� 634� 536� Other operating expense 1,135� 1,095� 3,525� 2,861� Total Non-Interest Expense 6,966� 6,202� 21,204� 16,497� � Income before income taxes 1,906� 2,619� 5,705� 7,104� Income tax expense 299� 580� 867� 1,665� � Net income $1,607� $2,039� $4,838� $5,439� � � � Net income per share: BASIC $0.48� $0.63� $1.43� $1.75� DILUTED $0.47� $0.62� $1.43� $1.73� � Basic weighted average shares outstanding 3,372,188� 3,252,157� 3,372,780� 3,114,303� Diluted weighted average shares outstanding 3,393,341� 3,283,682� 3,394,517� 3,139,371� � � PERFORMANCE RATIOS (annualized) � Return on average assets 0.66% 0.94% 0.69% 1.00% Return on average equity 9.90% 13.71% 10.12% 13.34% Net interest margin (tax-equivalent) 3.23% 3.65% 3.39% 3.80% Efficiency ratio (tax-equivalent) 72.86% 66.01% 73.27% 65.98% � � ASSET QUALITY � Net loan charge-offs ($4) $6� $201� $28� Total non-performing loans $4,125� $2,514� $4,125� $2,514� Non-performing loans as a % of total loans 0.70% 0.44% 0.70% 0.44% Princeton National Bancorp, Inc. (NASDAQ:PNBC) Tony J. Sorcic, President & CEO, announced today, "Total assets of Princeton National Bancorp, Inc. surpassed a record $1 billion on October 11, 2006. The Board of Directors and Management wish to express "Thanks A Billion" to the shareholders, customers and staff for their contributions to this monumental event. Since 1995, total assets of PNBC have increased by just over $600 million. This record level of assets was attained through growth in existing offices, establishing new offices and completing two acquisitions. In the last ten years, the Company has added offices in Hampshire, Huntley, Plano, Aurora, Somonauk, Newark, Sandwich and Millbrook. The Company remains focused on its long-term goal to increase assets and generate a consistent return to its shareholders. The Subsidiary Bank will continue its focus on providing innovative products and the best-quality service to its customers." Sorcic continued, "At the October 23, 2006 meeting, the Board of Directors declared a dividend of $.26 per share, payable November 24, 2006, to those shareholders of record as of November 3, 2006. This represents a 13.0% increase over the November 2005 dividend of $.23 per share and a 4.0% increase over the August 2006 dividend of $.25 per share. This is the Company's 87th consecutive dividend and the dividend has been increased eight out of the last 12 quarters. The Board of Directors also declared a special dividend of $.05 per share payable November 24, 2006 to those shareholders of record as of November 3, 2006. This is the sixth consecutive year the Company has declared a special dividend. Dividends per share for 2006 will total $1.05." Sorcic concluded, "In April 2006, the Company announced a 100,000 share stock repurchase program. The Company purchased 10,000 shares during the third quarter at an average price of $33.50. It is anticipated the remaining shares under the stock repurchase program will be purchased during the fourth quarter of 2006 and first quarter of 2007. Since 1997, the Company has repurchased 1,269,271 shares of common stock through stock repurchase programs." Total assets at September 30, 2006 were $990,364,000, a $47.8 million, or 5.1%, increase compared to June 30, 2006 and a $62.8 million, or 6.8%, increase from September 30, 2005. In comparing total loans for the third quarter of 2006 to the second quarter of 2006, a 2.0% increase was achieved, bringing total loans to $589,906,000. The Company's loan portfolio continues to be comprised of high-quality loans; net loan charge-offs (.046% annualized) during the first nine months of 2006 were minimal. Total deposits ended the third quarter at $873.4 million (including repurchase agreements), a $43.1 million increase from June 30, 2006 and a $60.4 million increase from September 30, 2005. Although the Company's income continues to be negatively impacted by the net interest margin, net income rose slightly in the third quarter of 2006 to $1,607,000 from $1,581,000 in the second quarter and diluted earnings per share rose to $.47 from $.46. The Return on Average Equity declined somewhat to 9.90%, compared to 9.94% for the second quarter of 2006. Net income for the first nine months of 2006 was $4,838,000, diluted earnings per share were $1.43 and the return on average equity was 10.12%. Net income for the first nine months of 2005 was $5,439,000, diluted earnings per share totaled $1.73 and the return on average equity was 13.34%. The Subsidiary Bank continues to meet expectations on non-interest income and non-interest expense. However, the compressed net interest margin, due to the flat yield curve, continues to negatively impact net income. Non-interest income for the third quarter was $2,564,000, a decrease of 2.9% from $2,640,000 in second quarter of 2006 and an increase of 11.7% from $2,295,000 in the third quarter of 2005. For the twenty-fifth consecutive quarter, the Company's annualized non-interest income equaled or exceeded 1% of average assets. The Company generated non-interest income of $7,713,000 during the first nine months of 2006, an increase of 24.3% from $6,206,000 for the same period in 2005. Contributing to the improvement were increases in service charges on deposits, gains on the sales of securities available-for-sale, brokerage fee income, mortgage banking income, gains on the sale of mortgage loans, and gain on the sale of the Farm Management Department. The net interest margin (tax equivalent) for the first nine months of 2006 declined to 3.39% versus 3.80% for the same period in 2005. The net interest margin has been negatively impacted by interest rates increasing more rapidly on interest-bearing liabilities than on interest-earning assets, as well as more funds being transferred into certificates of deposit from accounts bearing lower interest rates. The Company has $60.8 million in loans in its Commercial Banking pipeline, which should fund over the next 12 months. We believe these loans, if they are added to the loan portfolio, will have a positive impact on the net interest margin. Also, action plans have been implemented to generate additional non-interest income, increase interest income and reduce interest expense. For additional financial information, please refer to the attached September 30, 2006 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. To obtain information about the plan, please contact us at 815-875-4445, extension 650. Princeton National Bancorp, Inc. is the parent holding company of Citizens First National Bank, a $1.0 billion community bank with strategic locations in 7 counties in northern Illinois. The Company is well-positioned in the high growth counties of Kendall, Kane, Grundy, DeKalb, and LaSalle plus Bureau and Marshall. Communities include: Aurora, DePue, Genoa, Hampshire, Henry, Huntley, Millbrook, Minooka, Newark, Oglesby, Peru, 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. -0- *T Princeton National Bancorp, Inc. CONSOLIDATED BALANCE SHEETS (dollars in thousands, except share data) September 30, 2006 December 31, (unaudited) 2005 ------------- ------------- ASSETS Cash and due from banks $16,115 $23,635 Interest-bearing deposits with financial institutions 6,921 110 Federal funds sold 16,260 0 ------------- ------------- Total cash and cash equivalents 39,296 23,745 Loans held for sale, at lower of cost or market 3,864 2,587 Investment securities available-for-sale, at fair value 250,734 235,371 Investment securities held-to-maturity, at amortized cost 16,629 16,115 ------------- ------------- Total investment securities 267,363 251,486 Loans, net of unearned interest 589,906 581,724 Allowance for loan losses (3,164) (3,109) ------------- ------------- Net loans 586,742 578,615 Premises and equipment, net 28,121 26,412 Bank-owned life insurance 21,490 20,434 Interest receivable 10,314 8,714 Goodwill, net of accumulated amortization 22,678 22,665 Intangible assets, net of accumulated amortization 6,152 6,843 Other real estate owned 440 468 Other assets 3,904 3,294 ------------- ------------- TOTAL ASSETS $990,364 $945,263 ============= ============= ---------------------------------------------------------------------- LIABILITIES Demand deposits $89,606 $103,622 Interest-bearing demand deposits 228,717 222,675 Savings deposits 114,791 109,491 Time deposits 405,372 362,770 ------------- ------------- Total deposits 838,486 798,558 Customer repurchase agreements 34,931 29,375 Advances from the Federal Home Loan Bank 7,364 8,346 Interest-bearing demand notes issued to the U.S. Treasury 2,486 2,154 Federal funds purchased 0 1,000 Trust Preferred securities 25,000 25,000 Note payable 6,550 6,700 ------------- ------------- Total borrowings 76,331 72,575 Other liabilities 9,337 10,986 ------------- ------------- Total liabilities 924,154 882,119 ------------- ------------- STOCKHOLDERS' EQUITY Common stock 22,392 22,392 Surplus 18,025 16,968 Retained earnings 47,562 45,786 Accumulated other comprehensive loss, net of tax (129) (482) Less: Treasury stock (21,640) (21,520) ------------- ------------- Total stockholders' equity 66,210 63,144 ------------- ------------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $990,364 $945,263 ============= ============= CAPITAL STATISTICS (UNAUDITED) YTD average equity to average assets 6.77% 7.21% Tier 1 leverage capital ratio 6.63% 6.46% Tier 1 risk-based capital ratio 9.27% 9.26% Total risk-based capital ratio 9.75% 9.76% Book value per share $19.65 $18.87 Closing market price per share $33.00 $33.25 End of period shares outstanding 3,369,245 3,346,443 End of period treasury shares outstanding 1,109,050 1,131,853 *T -0- *T Princeton National Bancorp, Inc. CONSOLIDATED STATEMENTS OF INCOME (unaudited) (dollars in thousands, except share data) THREE THREE NINE NINE MONTHS MONTHS MONTHS MONTHS ENDED ENDED ENDED ENDED September September September September 30, 2006 30, 2005 30, 2006 30, 2005 ---------- ---------- ---------- ---------- INTEREST INCOME Interest and fees on loans $10,714 $8,547 $30,559 $21,609 Interest and dividends on investment securities 2,767 2,419 7,905 5,838 Interest on federal funds sold 206 65 357 75 Interest on interest- bearing time deposits in other banks 59 34 77 43 ---------- ---------- ---------- ---------- Total Interest Income 13,746 11,065 38,898 27,565 ---------- ---------- ---------- ---------- INTEREST EXPENSE Interest on deposits 6,397 3,866 16,736 9,098 Interest on borrowings 961 673 2,791 1,072 ---------- ---------- ---------- ---------- Total Interest Expense 7,358 4,539 19,527 10,170 ---------- ---------- ---------- ---------- Net interest income 6,388 6,526 19,371 17,395 Provision for loan losses 80 0 175 0 ---------- ---------- ---------- ---------- Net interest income after provision 6,308 6,526 19,196 17,395 ---------- ---------- ---------- ---------- NON-INTEREST INCOME Trust & farm management fees 300 364 1,158 1,192 Service charges on deposit accounts 1,065 936 3,166 2,416 Other service charges 501 357 1,336 953 Gain on sales of securities available-for-sale 98 21 158 50 Gain on sale of loans 0 0 90 0 Brokerage fee income 201 212 563 504 Mortgage banking income 149 198 536 527 Bank-owned life insurance 205 169 581 444 Other operating income 45 38 125 120 ---------- ---------- ---------- ---------- Total Non-Interest Income 2,564 2,295 7,713 6,206 ---------- ---------- ---------- ---------- NON-INTEREST EXPENSE Salaries and employee benefits 3,936 3,621 11,944 9,608 Occupancy 523 428 1,458 1,105 Equipment expense 717 494 2,138 1,418 Federal insurance assessments 78 63 236 179 Intangible assets amortization 163 81 488 185 Data processing 194 202 781 605 Advertising 220 218 634 536 Other operating expense 1,135 1,095 3,525 2,861 ---------- ---------- ---------- ---------- Total Non-Interest Expense 6,966 6,202 21,204 16,497 ---------- ---------- ---------- ---------- Income before income taxes 1,906 2,619 5,705 7,104 Income tax expense 299 580 867 1,665 ---------- ---------- ---------- ---------- Net income $1,607 $2,039 $4,838 $5,439 ========== ========== ========== ========== Net income per share: BASIC $0.48 $0.63 $1.43 $1.75 DILUTED $0.47 $0.62 $1.43 $1.73 Basic weighted average shares outstanding 3,372,188 3,252,157 3,372,780 3,114,303 Diluted weighted average shares outstanding 3,393,341 3,283,682 3,394,517 3,139,371 PERFORMANCE RATIOS (annualized) Return on average assets 0.66% 0.94% 0.69% 1.00% Return on average equity 9.90% 13.71% 10.12% 13.34% Net interest margin (tax- equivalent) 3.23% 3.65% 3.39% 3.80% Efficiency ratio (tax- equivalent) 72.86% 66.01% 73.27% 65.98% ASSET QUALITY Net loan charge-offs ($4) $6 $201 $28 Total non-performing loans $4,125 $2,514 $4,125 $2,514 Non-performing loans as a % of total loans 0.70% 0.44% 0.70% 0.44% *T