FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
Commission File No. 0-20050
PRINCETON NATIONAL BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-32110283
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
606 S. Main Street, Princeton, IL 61356
(Address of principal executive offices and Zip Code)
(815) 875-4444
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes _X_ No ___
As of November 10, 1997, the registrant had outstanding
2,681,290 shares of its $5 par value common stock.
<PAGE> 2
Part I: FINANCIAL INFORMATION
The consolidated financial statements of Princeton National
Bancorp, Inc. and Subsidiary and management's discussion and analysis
of financial condition and results of operations are presented in the
schedules as follows:
Schedule 1: Consolidated Balance Sheets
Schedule 2: Consolidated Statements of Income
Schedule 3: Consolidated Statements of Stockholders'
Equity
Schedule 4: Consolidated Statements of Cash Flows
Schedule 5: Note to Consolidated Financial
Statements
Schedule 6: Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Part II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 - Amended and Restated Certificate of Incorporation of
Princeton National Bancorp, Inc., filed with the
Delaware Secretary of State on March 12, 1992, as
amended by Certificate of Amendment of Amended and
Restated Certificate of Incorporation of Princeton
National Bancorp, Inc., filed with the Delaware
Secretary of State on August 1, 1997
27 - Financial Data Schedule
(b) Reports on Form 8-K:
On July 31, 1997, the registrant filed a report on Form 8-K
relating to the issuance of a press release by the registrant
announcing its adoption of a stock repurchase program.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
PRINCETON NATIONAL BANCORP, INC.
Date: November 14, 1997 By /s/ Tony J. Sorcic
---------------------------
Tony J. Sorcic
President
Date: November 14, 1997 By /s/ Todd D. Fanning
---------------------------
Todd D. Fanning
Chief Financial Officer
<PAGE> 4
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY Schedule 1
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
September 30 December 31,
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $13,937 $18,033
Short-term funds 16,002 3,100
Loans held for sale 2,693 2,849
Investment securities:
Available-for-sale, at fair value 97,151 105,893
Held-to-maturity (fair value of $13,068 and $11,135 at
September 30, 1997 and December 31, 1996, respectively) 12,924 11,135
-------- --------
Total investment securities 110,075 117,028
-------- --------
Loans:
Gross loans 275,485 258,118
Less: Unearned interest (140) (187)
Allowance for possible loan losses (1,844) (1,630)
-------- --------
Net loans 273,501 256,301
-------- --------
Premises and equipment 8,837 9,147
Interest receivable 6,052 5,725
Goodwill and intangible assets, net of accumulated amortization 5,368 5,541
Other assets 2,770 2,683
-------- --------
TOTAL ASSETS $439,235 $420,407
======== ========
LIABILITIES
Deposits:
Demand $ 34,498 $ 41,258
Interest-bearing demand 88,408 78,883
Savings 52,973 55,077
Time 201,876 183,483
--------- --------
Total deposits 377,755 358,701
--------- --------
Short-term borrowings:
Customer repurchase agreements 7,690 11,597
Interest-bearing demand notes issued to the U.S. Treasury 2,867 1,940
F.H.L.B. Borrowings 1,190 0
--------- --------
Total short-term borrowings 11,747 13,537
--------- --------
Long-term borrowings 3,900 4,350
Other liabilities 3,936 3,622
--------- --------
TOTAL LIABILITIES 397,338 380,210
--------- --------
STOCKHOLDERS' EQUITY
Common stock: $5 par value, 7,000,000 shares authorized and
2,759,945 issued at September 30, 1997; 4,000,000 shares
authorized and 2,759,945 issued at December 31, 1996 13,800 13,800
Surplus 6,067 6,067
Retained earnings 22,661 20,250
Unrealized gain on investment securities available-for-sale,
net of tax effect 502 300
Less: Cost of 78,655 treasury shares at September 30, 1997
and 35,979 treasury shares at December 31, 1996 (1,133) (220)
--------- --------
TOTAL STOCKHOLDERS' EQUITY 41,897 40,197
--------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $439,235 $420,407
========= ========
</TABLE>
See accompanying note to consolidated financial statements
<PAGE> 5
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY Schedule 2
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
(Unaudited) Ended September 30 Ended September 30
(In thousands, except share data) 1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 6,290 $ 5,643 $ 17,999 $ 16,390
Interest and dividends on investment securities 1,631 1,741 4,912 5,118
Interest on federal funds sold 43 6 127 84
Interest on interest-bearing time deposits in
other banks 0 0 0 23
------- ------- ------- -------
Total interest income 7,964 7,390 23,038 21,615
Interest expense:
Interest on deposits 3,784 3,535 10,716 10,273
Interest on short-term borrowings 129 102 321 275
Interest on long-term borrowings 88 114 268 313
------- ------- ------- -------
Total interest expense 4,001 3,751 11,305 10,861
------- ------- ------- -------
Net interest income 3,963 3,639 11,733 10,754
Provision for possible loan losses 173 0 485 0
------- ------- ------- -------
Net interest income after provision
for possible loan losses 3,790 3,639 11,248 10,754
Non-interest income:
Trust & farm management fees 250 215 805 711
Service charges on deposit accounts 364 311 1,017 855
Other service charges 122 108 332 319
Securities transactions, net 26 (1) 94 (27)
Loan servicing fees and other charges 52 35 122 158
Other operating income 45 32 168 90
------- ------- ------- -------
Total non-interest income 859 700 2,538 2,106
Non-interest expense:
Salaries and employee benefits 1,706 1,646 5,025 4,806
Occupancy 245 252 732 710
Equipment expense 208 221 663 632
FDIC/OCC assessments 45 390 99 513
Goodwill and intangible assets amortization 114 118 348 257
Data processing 176 151 508 430
Trust customer charges 10 119 27 362
Other operating expense 681 683 1,980 1,999
------- ------- ------- -------
Total non-interest expense 3,185 3,580 9,382 9,709
------- ------- ------- -------
Income before income taxes 1,464 759 4,404 3,151
Income tax expense 382 135 1,148 718
------- ------- ------- -------
Net income $ 1,082 $ 624 $ 3,256 $ 2,433
======= ======= ======= =======
Net income per share: 0.40 0.23 1.20 0.89
Weighted average shares outstanding 2,709,790 2,721,417 2,719,406 2,719,991
Dividends per share 0.11 0.10 0.31 0.28
</TABLE>
See accompanying note to consolidated financial statements
<PAGE> 6
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY Schedule 3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30
1997 1996
---- ----
(in thousands)
<S> <C> <C>
Balance, January 1 $40,197 $37,646
Net income 3,256 2,433
Cash dividends (845) (761)
Change in unrealized gain (loss)
on investment securities
available-for-sale,
net of tax effect 202 (247)
Purchases of treasury stock (959) 0
Sales of treasury stock 46 65
------- -------
Balance, September 30 $41,897 $39,136
======= =======
See accompanying note to consolidated financial statements
<PAGE> 7
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY Schedule 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
</TABLE>
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30 Ended September 30
(in thousands) 1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Operating activities:
Net income $1,082 $624 $3,256 $2,433
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 213 222 665 681
Provision for possible loan losses 173 0 485 0
Amortization of goodwill and other intangible assets 114 118 348 257
Amortization of premiums (discounts) on
investment securities, net of accretion 9 78 67 290
(Gain) loss on sales of securities, net (26) 1 (94) 27
Loss on sales of other real estate 0 0 1 5
Loans originated for sale (3,016) (939) (5,281) (7,352)
Proceeds from sales of loans originated for sale 2,681 1,107 5,437 4,808
Increase (decrease) in accrued interest payable 181 (47) 309 9
Increase in accrued interest receivable (1,102) (1,136) (327) (770)
Decrease (increase) in other assets 514 (149) (444) (700)
(Decrease) increase in other liabilities (543) (191) (99) 555
------ ------ ------ ------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 280 (312) 4,323 243
------ ------ ------ ------
INVESTING ACTIVITIES:
Proceeds from sales of investment securities
available-for-sale 3,026 1,384 6,514 1,723
Proceeds from maturities of investment securities
available-for-sale 11,643 21,296 35,294 55,376
Purchase of investment securities available-for-sale (12,868) (10,400) (32,679) (47,478)
Proceeds from maturities of investment securities
held-to-maturity 40 643 615 1,713
Purchase of investment securities held-to-maturity (1,565) (1,046) (2,458) (1,867)
Proceeds from sales of other real estate owned 0 0 181 11
Net increase in loans (6,430) (11,710) (17,685) (23,236)
Purchases of premises and equipment (79) (182) (355) (850)
Payment for acquisition, net of cash and cash
equivalents acquired 0 0 0 (2,947)
------ ------ ------ ------
NET CASH USED FOR INVESTING ACTIVITIES (6,233) (15) (10,573) (17,555)
------ ------ ------ ------
FINANCING ACTIVITIES:
Net increase in deposits 10,646 792 19,054 14,347
Net increase (decrease) in short-term borrowings 713 1,402 (1,790) (1,432)
Proceeds from long-term borrowings 0 0 0 1,000
Payments for long-term borrowings (300) (150) (450) (450)
Dividends paid (300) (272) (845) (761)
Purchase of treasury stock (959) 0 (959) 0
Sale of treasury stock 14 12 46 65
------ ------ ------ ------
NET CASH PROVIDED BY FINANCING ACTIVITIES 9,814 1,784 15,056 12,769
------ ------ ------ ------
Increase (decrease) in cash and cash equivalents 3,861 1,457 8,806 (4,543)
Cash and cash equivalents at beginning of quarter and year 26,078 18,434 21,133 24,434
------ ------ ------ ------
Cash and cash equivalents at September 30 29,939 19,891 29,939 19,891
====== ====== ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $3,730 $3,787 $10,906 $10,793
Income taxes $433 $387 $1,367 $944
Supplemental disclosures of non-cash flow activities:
Amounts transferred to other real estate owned $0 $168 $108 $168
</TABLE>
See accompanying note to consolidated financial statements
<PAGE> 8
Schedule 5
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY
Note to Consolidated Financial Statements
(Unaudited)
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information required by generally accepted
accounting principles for complete financial statements and related
footnote disclosures. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) considered for a fair
presentation of the results for the interim period have been included.
For further information, refer to the financial statements and notes
included in the Registrant's 1996 Annual Report on Form 10-K. Results
of operations for interim periods are not necessarily indicative of
the results that may be expected for the year.
<PAGE> 9
Schedule 6
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 30, 1997
(unaudited)
The following discussion provides information about Princeton
National Bancorp, Inc.'s (PNB) financial condition and results of
operations for the quarter and nine-month period ending September 30,
1997. This discussion should be read in conjunction with the attached
consolidated financial statements and note thereto.
RESULTS OF OPERATIONS
---------------------
Net income for the third quarter of 1997 was $1,082,000, or $0.40
per share, an increase from the third quarter of 1996 of $458,000 (or
73.4%), which represents an increase of $0.17 per share (or 73.9%).
Net income in third quarter of 1996 was negatively impacted by
$218,000 (after-tax) by the SAIF-FICO bill mandating a special one-
time payment to the FDIC to bring the SAIF fund up to its required
reserve ratio. For the first nine months of 1997, net income was
$3,256,000 (or $1.20 per share), compared to $2,433,000 (or $0.89 per
share) in the first nine months of 1996. Annualized return on average
assets and return on average equity were 1.01% and 10.36%,
respectively, for the third quarter of 1997, compared with 0.60% and
6.43% for the third quarter of 1996. For the nine-month periods, the
annualized returns on average assets and average equity were 1.03% and
10.59%, respectively, for 1997, compared to 0.81% and 8.55% in 1996.
Along with the continued increase in the average balance of loans
outstanding, was a significant increase in short-term funds (Federal
Funds Sold and other interest-bearing overnight balances). This
caused the change in the net interest margin to again be the most
significant reason for the increase in net income. Net interest
income before any provision for loan losses was $3,963,000 for the
third quarter of 1997, compared to $3,639,000 for the third quarter of
1996 (an increase of $324,000 or 8.9%). Additionally, for the nine-
month periods, net interest income before any provision for loan
losses was $11,733,000 for 1997, as compared to $10,754,000 for 1996,
representing an increase of $979,000 (or 9.1%). As of September 30,
1997, total loans represented 63.3% of total assets compared with
62.0% as of December 31, 1996.
Non-interest income increased by $159,000 (or 22.7%) during the
third quarter of 1997 as compared to the third quarter of 1996. For
the first nine months of 1997, non-interest income has increased to
$2,538,000 from $2,106,000 in the first nine months of 1996 (an
increase of $432,000 or 20.5%). The majority of the overall increase
can be seen in two categories: service charges on deposit accounts
and trust and farm management fees ($162,000 or 19.0% and $94,000 or
13.2%, respectively), both due to an increase in the number of accounts.
Additionally, PNB incurred net losses of $27,000 from securities trans-
<PAGE> 10
actions in the first nine months of 1996, while recording net gains of
$94,000 in the first nine months of 1997 (an improvement to non-interest
income of $121,000).
Non-interest expense for the third quarter of 1997 amounted to
$3,185,000, a decrease of $395,000 (11.0%) from the third quarter of
1996. This decrease is due to the aforementioned special payment to
the FDIC of $336,000 (pre-tax) in 1996. Year-to-date non-interest expenses
have also decreased in 1997: from $9,709,000 as of September 30, 1996
to $9,382,000 as of September 30, 1997 (decrease of $327,000 or 3.3%).
A decline in trust customer charges, as well the decrease in FDIC/OCC
assessments (due to lower premium rates and the one-time payment) has
helped offset increases in salaries and employee benefits and data
processing expenses. The latter having increased due to the Sandwich
branch acquisition completed in June, 1996. Therefore, these
categories would not have been influenced in the first six months of
1996.
ANALYSIS OF FINANCIAL CONDITION
-------------------------------
Total assets at September 30, 1997 increased to $439,235,000 from
$420,407,000 at December 31, 1996 ($18.8 million or 4.5%). This
increase is attributable mainly to deposit growth, particularly in
time deposits. During the third quarter of 1997, the subsidiary bank
had a CD promotion which has helped time deposits grow from
$183,483,000 on December 31, 1996 to $201,876,000 on September 30,
1997 ($18.4 million increase or 10.0%). Interest-bearing demand
deposits have also increased, from $78.9 million on December 31, 1996
to $88.4 million on September 30, 1997 ($9.5 million or 12.1%). These
increases helped offset decreases in demand deposits ($6.7 million or
16.4%) and savings deposits ($2.1 million or 3.8%). Additionally,
customer repurchase agreements have decreased in the first nine months
by $3.9 million or 33.7%.
Loan demand continues to be very strong during the first nine
months of 1997. Loan balances (including those held for sale), net of
unearned interest, increased to $278,038,000 at September 30, 1997,
compared to $260,780,000 at December 31, 1996 (an increase of $17.3
million or 6.6%). Non-performing loans totaled $1,171,000 or 0.42%
of net loans at September 30, 1997, as compared to $1,157,000 or 0.44%
of net loans at December 31, 1996. As a result of the continued strong
loan demand, total investment securities decreased from $117.0 million
at December 31, 1996 to $110.0 million at September 30, 1997.
During the first nine months of 1997, PNB charged off $763,000 of
loans and had recoveries of $493,000. This compares to charge-offs of
$1,032,000 and recoveries of $737,000 during the first nine months of
1996. The allowance for possible loan losses is based on factors that
include the overall composition of the loan portfolio, types of loans,
past loss experience, loan delinquencies, potential substandard and
doubtful credits, and such other factors that, in management's best
judgement, deserve evaluation. The adequacy of the allowance is
monitored monthly. During the first nine months of 1997, PNB recorded
<PAGE> 11
a provision for loan loss expense of $485,000. Throughout 1997,
provisions have been made to strengthen the allowance for possible loan
losses with the balance increasing in excess of $200,000. The allowance
is bring increased to keep pace with loan growth and in preparation of
future needs. At September 30, 1997, the balance in the allowance was
$1,884,000 which is 0.66% of total loans, compared with $1,630,000 or
0.63% of total loans at December 31, 1996.
At September 30, 1997, the recorded balance in loans for which
impairment has been recognized in accordance with FASB Statement No.
114 totaled $577,000, compared to $571,000 at September 30, 1996. All
of which related to impaired loans which do not require a related
allowance for possible loan losses as the carrying value of the loans
exceeds the discounted present value of expected future cash flows.
Interest recognized on impaired loans (during the portion of this quarter
that they were impaired) is not considered material.
CAPITAL RESOURCES
-----------------
Federal regulations require all financial institutions to
evaluate capital adequacy by the risk-based capital method, which
makes capital requirements more sensitive to the differences in the
level of risk assets. At September 30, 1997, total risk-based capital
was 14.01%, compared to 13.88% at December 31, 1996. However, the
Tier 1 capital ratio decreased from 8.59% at December 31, 1996,
to 8.52% at September 30, 1997. Additionally, total stockholders' equity
to total assets at September 30, 1997 decreased to 9.54% from 9.56% at
December 31, 1996. This is due to the Corporation's plan (announced
in July) to repurchase 3% of its own stock and during the third quarter of
1997, PNB repurchased $959,000 (or 45,000 shares).
LIQUIDITY
---------
Liquidity is measured by a financial institution's ability to
raise funds through deposits, borrowed funds, capital, or the sale of
assets. Additional sources of liquidity, including cash flow from
both the repayment of loans and the securitization of assets, are also
considered in determining whether liquidity is satisfactory. Cash
flows provided by operating and financing activities, offset by those
used by investing activities, resulted in a net increase in cash and
cash equivalents of $8,806,000 from December 31, 1996 to September 30,
1997. This was due largely to a net increase in deposits and a decrease
in investments (maturities and sales greater than purchases), offset by a
net increase in loans. For more detailed cash flow information, see PNB's
Consolidated Statement of Cash Flows.
IMPACT OF NEW ACCOUNTING STANDARDS
----------------------------------
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 129. "Disclosure of
<PAGE> 12
Information about Capital Structure" (FAS 129). FAS 129 provides required
disclosures for the capital structure of both public and nonpublic com-
panies and is effective for financial statements for periods ending after
December 15, 1997. The required disclosures had been included in a number
of separate statements and opinions. As such, the issuance of FAS 129
is not expected to require significant revision of prior disclosures.
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
(FAS 130). FAS 130 establishes standards for reporting and the presenta-
tion of comprehensive income and its components in a full set of general-
purpose financial statements. FAS 130 is effective for both interim and
annual periods beginning after December 15, 1997 and is not expected to
have a material impact on the Company.
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (FAS 131). FAS 131 establishes
standards for the way public business enterprises are to report information
about operating segments in annual financial statements and requires those
enterprises to report selected information about operating segments in
interim financial reports issued to shareholders. FAS 131 is effective for
financial periods beginning after December 15, 1997 and is not expected to
have a material impact on the Company.
EFFECTS OF INFLATION
--------------------
The consolidated financial statements and related consolidated
financial data presented herein have been prepared in accordance with
generally accepted accounting principles and practices within the
banking industry which require the measurement of financial position
and operating results in terms of historical dollars, without
considering the changes in the relative purchasing power of money over
time due to inflation. Unlike most industrial companies, virtually
all the assets and liabilities of a financial institution are monetary
in nature. As a result, interest rates have a more significant impact
on a financial institution's performance than the effects of general
levels of inflation.
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PRINCETON NATIONAL BANCORP, INC.
Princeton National Bancorp, Inc., a corporation organized and
existing under the laws of the State of Delaware, hereby certifies as
follows:
1. The name of the corporation is Princeton National Bancorp,
Inc. (the "Corporation"). The Corporation filed its original
Certificate of Incorporation with the Delaware Secretary of State on
September 4, 1981.
2. This Amended and Restated Certificate of Incorporation
restates, integrates and further amends the provisions of the
Certificate of Incorporation of this Corporation as heretofore amended
or supplemented.
3. The text of the Certificate of Incorporation as amended or
supplemented heretofore is hereby amended and restated to read as
herein set forth in full:
FIRST: The name of the Corporation is Princeton National
Bancorp, Inc.
SECOND: The address of its registered office in the State of
Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover,
County of Kent. The name of its registered agent at such address is
The Prentice-Hall Corporation System, Inc.
<PAGE> 14
THIRD: The purposes of the Corporation is to engage in any
lawful act or activity for which a corporation may be organized under
the General Corporation Law of the State of Delaware. Without
limiting in any manner the scope and generality of the foregoing, it
is hereby provided that the Corporation shall have the following
purposes, objects and powers:
(a) To improve, manage, develop, sell, assign,
transfer, lease, mortgage, pledge or otherwise
dispose of or turn to account or deal with all or
any part of the property of the Corporation and
from time to time to vary any investment or
employment of capital of the Corporation.
(b) To borrow money, and to make and issue notes,
bonds, debentures, obligations and evidences of
indebtedness of all kinds, whether secured by
mortgage, pledge or otherwise, without limit as to
amount, and to secure the same by mortgage, pledge
or otherwise; and generally to make and perform
agreements and contracts to every kind and
description, including contracts of guaranty and
suretyship.
(c) To lend money for its corporate purposes, invest
and reinvest its funds, and take, hold and deal
with real and personal property as security for
the payment of funds so loaned or invested.
<PAGE> 15
(d) To pay pensions and establish and carry out
pension, profit sharing, stock option, stock
purchase, stock bonus, retirement, benefit,
incentive and commission plans, trusts and
provisions for any or all of its directors,
officers and employees, and for any or all of the
directors, officers and employees of its
subsidiaries; and to provide insurance for its
benefit on the life of any of its directors,
officers or employees, or on the life of any
stockholder for the purpose of acquiring at his
death shares of its stock owned by such
stockholder.
(e) To acquire by purchase, subscription or otherwise,
and to hold for investment or otherwise and to
use, sell, assign, transfer, mortgage, pledge or
otherwise deal with or dispose of stocks, bonds or
any other obligations or securities of any
corporation or corporations (including, but not
limited to, stock in a national banking
association); to merge or consolidate with any
corporation in such manner as may be permitted by
law, to aid in any manner any corporation whose
stocks, bonds or otherwise obligations are held or
in any manner guaranteed by this Corporation, or
in which this Corporation is in any way
<PAGE> 16
interested; and to do any other acts or things for
the preservation, protection, improvement or
enhancement of the value of any such stock, bonds
or other obligations; and while owner of any such
stock, bonds or other obligations to exercise all
the rights, powers and privileges of ownership
thereof, and to exercise any and all voting powers
thereon; and to guarantee the payment of dividends
upon any stock the principal or interest or both,
of any bonds or other obligations, and the
performance of any contracts.
(f) To do all and everything necessary, suitable and
proper for the accomplishment of any of the
purposes or the attainment of any of the objects
or the furtherance of any of the powers
hereinbefore set forth, either alone or in
association with other corporations, firms or
individuals, and to do every other act or acts,
thing or things incidental or appurtenant to or
growing out of or connected with the aforesaid
business or powers or any part or parts thereof,
provided that same be not inconsistent with the
laws under which this Corporation is organized.
(g) The business or purpose of the Corporation is from
time to time to do any one or more of the acts and
things hereinabove set forth, and it shall have
<PAGE> 17
power to conduct and carry on its said business,
or any part thereof, and to have one or more
offices, and to exercise any or all of its
corporate powers and rights, in the State of
Delaware, and in the various other states,
territories, colonies and dependencies of the
United States, in the District of Columbia, and in
all or any foreign countries.
(h) The enumeration herein of the objects and purposes
of the Corporation shall be construed as powers as
well as objects and purposes and shall not be
deemed to exclude by inference any powers, objects
or purposes which the Corporation is empowered to
exercise, whether expressly by force of the laws
of the State of Delaware now or hereafter in
effect, or impliedly by the reasonable
construction of the said laws.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is four million (4,000,000)
shares of common stock, par value $5.00 per share.
FIFTH: A. NUMBER, TERM AND ELECTION. The Board of Directors
shall consist of not less than five nor more than twenty-five
directors, with the exact number of directors to be fixed from time to
time by the Board of Directors pursuant to a resolution adopted by a
majority of the Board of Directors then in office. The directors
shall be divided into three classes. At the meeting held for the
<PAGE> 18
election of the first board following the classification of directors,
directors of the first class shall be elected for a term which shall
expire at the first annual meeting of stockholders following their
election, directors of the second class shall be elected for a term
which shall expire at the second annual meeting following their
election, and directors of the third class shall be elected for a term
which shall expire at the third annual meeting following their
election. At each annual meeting following such classification and
initial election, directors chosen to succeed those whose terms expire
shall be elected for a term which shall expire at the third annual
meeting following their election so that the term of office of one
class of directors shall expire in each year. All directors of the
Corporation shall hold office until their respective successors are
duly elected and qualified. Any director elected to a particular
class by the stockholders or appointed by the directors pursuant to
paragraph B of Article Fifth shall be eligible, upon resignation, to
be elected to a different class in which a vacancy exists.
The names and addresses of the persons who shall serve as
directors and, effective upon the filing of this Amended and Restated
Certificate of Incorporation, the class in which such directors shall
serve, shall be as follows:
<PAGE> 19
Expiration
Name Address Class of Term
---- ------- ----- ----------
D. E. Van Ordstrand 606 South Main Street 1 1993 Annual Meeting
Princeton, Illinois 61356
Don S. Browning 606 South Main Street 1 1993 Annual Meeting
Princeton, Illinois 61356
Donald E. Grubb 606 South Main Street 1 1993 Annual Meeting
Princeton, Illinois 61356
Thomas M. Longman 606 South Main Street 2 1994 Annual Meeting
Princeton, Illinois 61356
James P. Monier 606 South Main Street 2 1994 Annual Meeting
Princeton, Illinois 61356
Tony J. Sorcic 606 South Main Street 2 1994 Annual Meeting
Princeton, Illinois 61356
Dr. Harold C. 606 South Main Street 3 1995 Annual Meeting
Hutchinson, Jr. Princeton, Illinois 61356
Thomas R. Lasier 606 South Main Street 3 1995 Annual Meeting
Princeton, Illinois 61356
Stephen W. Samet 606 South Main Street 3 1995 Annual Meeting
Princeton, Illinois 61356
B. NEWLY CREATED DIRECTORSHIPS. Unless the Board of
Directors otherwise determines, newly created directorships resulting
<PAGE> 20
from any increase in the authorized number of directors or any
vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may
be filled only by a majority vote of the directors then in office,
though less than a quorum, or by a sole remaining director, and
directors so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of office of the
class to which they have been elected expires and until each such
director's successor shall have been duly elected and qualified. In
no case shall a decrease in the number of directors shorten the term
of any incumbent director.
C. REMOVAL. Any director or the entire Board of Directors
may be removed from office at any time, but only for cause and by the
affirmative vote of the holders of at least a majority of the
outstanding common stock.
D. AMENDMENT, REPEAL OR ALTERATION. Notwithstanding any
other provisions of this Amended and Restated Certificate of
Incorporation or any provision of law which might otherwise permit a
lesser vote or no vote, the affirmative vote of the holders of at
least eighty percent (80%) of the then outstanding shares of the
common stock, shall be required to alter, amend or repeal, or adopt
any provision inconsistent with, this Article Fifth.
SIXTH: The following provisions are inserted for the
management of the business and for the conduct of the affairs of the
Corporation, and for further definition, limitation and regulation of
the powers of the Corporation and of its directors and stockholders:
<PAGE> 21
(a) Election of directors need not be by ballot unless
the by-laws so provide.
(b) The Board of Directors shall have power without
the assent or vote of the stockholders to make,
alter, amend, change, add to or repeal the by-laws
of the Corporation; to fix and vary the amount to
be reserved for any proper purpose; to authorize
and cause to be executed mortgages and liens upon
all or any part of the property of the
Corporation; to determine the use and disposition
of any surplus or net profits; and to fix the
times for the declaration and payment of
dividends.
(c) The directors in their discretion may submit any
contract or act for approval or ratification at
any annual meeting of the stockholders or at any
meeting of the stockholders called for the purpose
of considering any such act or contract, and any
contract or act that shall be approved or be
ratified by the vote of the holders of a majority
of the stock of the Corporation which is
represented in person or by proxy at such meeting
and entitled to vote thereat (provided that a
lawful quorum of stockholders be there represented
in person or by proxy) shall be as valid and as
binding upon the Corporation and upon all
<PAGE> 22
stockholders as though it had been approved or
ratified by every stockholder of the Corporation,
whether or not the contract or act would otherwise
be open to legal attack because of directors'
interest, or for any other reason.
Notwithstanding the foregoing, any vote on any
proposition involving the merger or consolidation
of this Corporation with any other corporation or
corporations which proposition has not been
recommended for approval by the stockholders of
this Corporation by a majority of this
Corporation's Board of Directors shall require
approval or ratification by the affirmative vote
of the holders of two-thirds (2/3) of the common
stock of the Corporation which is represented in
person or by proxy at the stockholder's meeting at
which such resolution is considered.
(d) In addition to the powers and authorities
hereinbefore or by statute expressly conferred
upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and
things as may be exercised or done by the
Corporation; subject, nevertheless, to the
provisions of the statutes of Delaware, of this
Certificate, and to any by-laws from time to time
made by the stockholders; provided, however, that
<PAGE> 23
no by-laws so made shall invalidate any prior act
of the directors which would have been valid if
such by-law had not been made.
SEVENTH: The Corporation shall, to the full extent permitted by
Section 145 of the General Corporation Law of the State of Delaware,
as amended from time to time, indemnify all persons whom it may
indemnify pursuant thereto.
EIGHTH: Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them and/or
between this Corporation and its stockholders or any class of them,
any court of equitable jurisdiction within the State of Delaware, may,
on the application in a summary way of this Corporation or of any
creditor or stockholder thereof or on the application of any receiver
or receivers appointed for this Corporation under the provisions of
Section 291 of Title 8 of the General Corporation Law of the State of
Delaware or on the application of trustees in dissolution or of any
receiver or receivers appointed for this Corporation under the
provisions of Section 279 of Title 8 of the General Corporation Law of
the State of Delaware order a meeting of the creditors or class of
creditors and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the
said court directs. If a majority in number representing three-
fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case
may be, agree to any compromise or arrangement and to any
reorganization of this Corporation as a consequence of such compromise
<PAGE> 24
or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors and/or on all the stockholders, of this Corporation, as the
case may be, and also on this Corporation.
NINTH: Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at an annual or
special meeting of the stockholders of the Corporation and may not be
effected by any consent in writing by such stockholders. In addition
to the voting requirement imposed by law or by any other provision of
this Amended and Restated Certificate of Incorporation, this Article
Tenth may not be amended, altered, or repealed, nor may any provision
inconsistent with this Article Tenth be adopted, unless such action is
approved by the affirmative vote of the holders of at least eighty
(80%) of the then outstanding shares of the common stock.
TENTH: The Corporation shall be governed by the provisions of
Section 203 of the General Corporation Law of the State of Delaware,
as amended from time to time, said Section being entitled "Business
Combinations with Interested Stockholders."
ELEVENTH: The personal liability of the directors of the
Corporation is hereby eliminated to the fullest extent permitted by
paragraph (7) of subsection (b) of Section 102 of the General
Corporation Law of the State of Delaware, as the same may be amended
and supplemented.
TWELFTH: The Corporation reserves the right to amend, alter,
change or repeal any provisions contained in this Amended and Restated
<PAGE> 25
Certificate of Incorporation, in the manner now or hereafter
prescribed by law, and all rights and powers conferred herein on
stockholders, directors and officers are subject to this reserved
power.
This Amended and Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of Sections 242 and 245 of
the General Corporation Law of the State of Delaware by affirmative
vote of the holders of a majority of all outstanding stock entitled to
vote at a meeting of stockholders.
IN WITNESS WHEREOF, said Princeton National Bancorp, Inc. has
caused this Certificate to be signed by D. E. Van Ordstrand, its
President and attested by Lou Ann Birkey, its Secretary this 10th day
of March, 1992.
PRINCETON NATIONAL BANCORP, INC.
By /s/ D. E. Van Ordstrand
--------------------------------
D. E. Van Ordstrand, President
ATTEST:
By /s/ Lou Ann Birkey
------------------------------
Lou Ann Birkey, Secretary
<PAGE> 26
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PRINCETON NATIONAL BANCORP, INC.
--------------------------------
PRINCETON NATIONAL BANCORP, INC., a corporation organized
and existing under and by virtue of the General Corporation Law of the
State of Delaware (the "Corporation"), DOES HEREBY CERTIFY:
FIRST: That on February 10, 1997, the Board of Directors of
the Corporation duly adopted resolutions proposing and declaring
advisable the following amendment to the Amended and Restated
Certificate of Incorporation of the Corporation:
RESOLVED, that the Board of Directors hereby
proposes and declares it advisable that the
Certificate of Incorporation be amended by
changing the article numbered "Fourth" so that, as
amended, said article shall be and read as
follows:
"FOURTH: The total number of shares of stock
which the Corporation is authorized to issue is
seven million (7,000,000) and the par value of
each such share is $5.00."
SECOND: That thereafter, pursuant to a resolution of the
Corporation's Board of Directors, an Annual Meeting of Stockholders of
the Corporation was duly called and held, upon notice in accordance
with Section 222 of the General Corporation Law of the State of
Delaware, at which meeting the necessary number of shares as required
by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, PRINCETON NATIONAL BANCORP, INC. has
caused this certificate to be executed by Tony J. Sorcic, President of
the Corporation, and attested by Lou Ann Birkey, its Secretary, this
29th day of July, 1997.
PRINCETON NATIONAL BANCORP, INC.
By: /s/ Tony J. Sorcic
--------------------------------
Tony J. Sorcic, President
ATTEST:
/s/ Lou Ann Birkey
---------------------------------
Lou Ann Birkey, Secretary
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
Exhibit 27
This schedule contains summary financial information extracted from
the Princeton National Bancorp, Inc. and Subsidiary Consolidated
Balance Sheets and Statements and Subsidiary Consolidated Balance
Sheets and Statements of Income and is qualified in its entirety by
reference to such financial statements.
For the nine-month period ending September 30, 1997:
---------------------------------------------------------------------
</LEGEND>
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1997
<CASH> 13,937
<INT-BEARING-DEPOSITS> 343,257
<FED-FUNDS-SOLD> 5,300
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> $97,151
<INVESTMENTS-CARRYING> $12,924
<INVESTMENTS-MARKET> $13,068
<LOANS> $278,038
<ALLOWANCE> $1,844
<TOTAL-ASSETS> $439,235
<DEPOSITS> $377,755
<SHORT-TERM> $11,747
<LIABILITIES-OTHER> $3,936
<LONG-TERM> $3,900
$0
$0
<COMMON> $13,800
<OTHER-SE> $28,097
<TOTAL-LIABILITIES-AND-EQUITY> $439,235
<INTEREST-LOAN> $17,999
<INTEREST-INVEST> $4,912
<INTEREST-OTHER> $127
<INTEREST-TOTAL> $23,038
<INTEREST-DEPOSIT> $10,716
<INTEREST-EXPENSE> $11,305
<INTEREST-INCOME-NET> $11,733
<LOAN-LOSSES> $485
<SECURITIES-GAINS> $94
<EXPENSE-OTHER> $9,382
<INCOME-PRETAX> $4,404
<INCOME-PRE-EXTRAORDINARY> $4,404
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $3,256
<EPS-PRIMARY> $1.20
<EPS-DILUTED> $1.20
<YIELD-ACTUAL> 4.27
<LOANS-NON> $1,159
<LOANS-PAST> $12
<LOANS-TROUBLED> $0
<LOANS-PROBLEM> $156
<ALLOWANCE-OPEN> $1,630
<CHARGE-OFFS> $763
<RECOVERIES> $493
<ALLOWANCE-CLOSE> $1,844
<ALLOWANCE-DOMESTIC> $1,844
<ALLOWANCE-FOREIGN> $0
<ALLOWANCE-UNALLOCATED> $0
</TABLE>
