PRELIMINARY COPY
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant _X_
Filed by a party other than the Registrant ___
Check the appropriate box:
_X_ Preliminary Proxy Statement
___ Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
___ Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
PRINCETON NATIONAL BANCORP, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
_X_ No fee required.
___ Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which
transaction applies:__________________________________
(2) Aggregate number of securities to which
transaction applies: _________________________________
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
______________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________
(5) Total fee paid: _____________________________________
___ Fee paid previously with preliminary materials.
___ Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ______________________________
(2) Form, Schedule or Registration Statement: ____________
(3) Filing Party: _______________________________________
(4) Date Filed: _________________________________________
<PAGE> 2
PRINCETON NATIONAL BANCORP, INC.
NOTICE
of
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 8, 1997
To the Stockholders of
PRINCETON NATIONAL BANCORP, INC.
The Annual Meeting of Stockholders of Princeton National Bancorp, Inc., a
Delaware corporation, will be held at The Galleria, Princeton, Illinois,
on Tuesday, April 8, 1997 at 10:00 a.m., for the following purposes:
(1) To elect three directors for a term of three years;
(2) To consider and vote upon an amendment to the Amended and Restated
Certificate of Incorporation of Princeton National Bancorp, Inc. to
increase the number of authorized shares of Common Stock from 4,000,000
to 7,000,000; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on February 10, 1997 will
be entitled to notice of and to vote at the meeting.
The Company's Annual Report to Stockholders for the year ended December
31, 1996 is enclosed.
IMPORTANT! TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING,
PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN THE
ENVELOPE PROVIDED.
NO POSTAGE IS REQUIRED IF THE PROXY IS MAILED IN THE UNITED STATES.
Lou Ann Birkey
Secretary
Princeton, Illinois
March 5, 1997
<PAGE> 3
PRINCETON NATIONAL BANCORP, INC.
606 SOUTH MAIN STREET
PRINCETON, ILLINOIS 61356
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card are being furnished
in connection with the solicitation of proxies by the Board of Directors
of Princeton National Bancorp, Inc. (the "Company"), from holders of the
Company's outstanding shares of common stock, par value $5.00 per share
(the "Common Stock"), for use at the 1997 Annual Meeting of Stockholders
(the "Annual Meeting") to be held on April 8, 1997 at The Galleria, 1659
North Main Street, Princeton, Illinois, or at any adjournment thereof,
for the purposes set forth in the accompanying Notice of Meeting and in
this Proxy Statement. The Company will bear the costs of soliciting
proxies from its stockholders. In addition to soliciting proxies by
mail, directors, officers and employees of the Company, without receiving
additional compensation therefor, may solicit proxies by telephone or in
person. This Proxy Statement and form of proxy are first being mailed to
the Company's stockholders on or about March 5, 1997.
VOTING AT THE ANNUAL MEETING
The close of business on February 10, 1997, has been fixed as the record
date for the determination of stockholders of the Company entitled to
notice of and to vote at the Annual Meeting. As of the close of business
on that date, 2,723,966 shares of Common Stock were outstanding and are
entitled to vote at the Annual Meeting.
Each proxy that is properly signed and received prior to the Annual
Meeting will, unless such proxy has been revoked, be voted in accordance
with the instructions on such proxy. If no instructions are indicated,
proxies will be voted "for" the election of all nominees named in the
proxy, "for" adoption of the amendment to the Amended and Restated
Certificate of Incorporation of the Company (the "Certificate") and in
the discretion of the persons named in the proxy on such other matters as
may properly come before the Annual Meeting. Any stockholder has the
right to revoke a proxy at any time prior to its exercise at the Annual
Meeting. A proxy may be revoked by properly executing and submitting to
the Company a later-dated proxy or by mailing written notice of
revocation to Princeton National Bancorp, Inc., 606 South Main Street,
Princeton, Illinois 61356, Attention: Lou Ann Birkey, Assistant Vice
President and Corporate Secretary. A stockholder may also revoke a proxy
by appearing at the Annual Meeting and voting in person. Proxies are
valid only for the meeting specified therein, or any adjournments of such
meeting.
A quorum of stockholders is necessary to take action at the Annual
Meeting. A majority of the outstanding Common Stock, represented in
person or by proxy, shall constitute a quorum for the transaction of
business at the Annual Meeting. Votes cast by proxy or in person at the
Annual Meeting will be tabulated by the judges of election appointed for
the meeting. The judges will determine whether a quorum is present and
will treat abstentions as shares that are present and entitled to vote
for purposes of determining the presence of a quorum. Under certain
circumstances, a broker or other nominee may have discretionary authority
to vote shares of Common Stock if instructions have not been received
from the beneficial owner or other person entitled to vote. If a broker
<PAGE> 4
or other nominee indicates on the proxy that it does not have
instructions or discretionary authority to vote certain shares of Common
Stock on a particular matter, those shares will not be considered as
present for purposes of determining whether a quorum is present or
whether a matter has been approved.
The three nominees for director who receive the greatest number of votes
cast in person or by proxy at the Annual Meeting shall be elected
directors of the Company. The vote required for the amendment to the
Certificate is the affirmative vote of a majority of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting.
For purposes of determining stockholder approval of the amendment to the
Certificate, abstentions will be treated as voted against such matter.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Company's Board of Directors is currently composed of ten directors
who are divided into three classes. One class is elected each year for a
three-year term. At the Annual Meeting, Messrs. Ernat, Sorcic and
Longman will be nominated to serve in Class II until the Annual Meeting
of Stockholders to be held in 2000 and until their successors have been
duly elected and qualified.
All of the nominees are currently serving as directors of the Company.
Each of the nominees has agreed to serve as a director if elected, and
the Company has no reason to believe that any nominee will be unable to
serve. In the event of the refusal or inability of any nominee for
director of the Company to serve as director, the persons named in the
accompanying form of proxy shall vote such proxies for such other person
or persons as may be nominated as directors by the Board of Directors of
the Company, unless the number of directors shall have been reduced by
the Board.
The principal occupation of each person nominated for election as a
director, and each director continuing in office, his age, the year in
which he first became a director and the number of shares of Common Stock
that such person beneficially owned as of February 10, 1997 are listed
below. Except as set forth below, the nature of each director's
beneficial ownership is sole voting and investment power. All of the
nominees and directors continuing in office, other than Messrs. Ervin
Pietsch and John Ernat, also served on the board of directors of the
Company's wholly owned subsidiary, Citizens First National Bank
("Citizens Bank") during 1996.
<PAGE> 5
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE ELECTION OF THE THREE NOMINEES LISTED BELOW.
<TABLE>
<CAPTION>
Amount of Shares of
Common
Name Principal Age Director Stock
Occupation During Since Beneficially
Last 5 Years Owned and Nature of
Beneficial Ownership<F1>
<S> <C> <C> <C> <C>
CLASS II NOMINEES FOR THREE-YEAR TERMS
John Ernat Farmer 48 1994 3,624
Tony J. Sorcic Executive Vice 43 1986 8,216<F2>
President of the
Company
Thomas M. Longman President of D.B.P. 45 1991 4,635<F3>
Inc., a supplier of
business forms and
office products
CLASS III CONTINUING DIRECTORS -- TERM EXPIRES IN 1998
Dr. Harold C. Hutchinson, Jr. Retired dentist 64 1989 6,923<F4>
Thomas R. Lasier Retired in 1993. President and 61 1983 13,500<F5>
General Manager of LCN Closers,
a division in Ingersoll-Rand
that manufactures hardware for
more than 5
years prior to retirement
Stephen W. Samet President and General 52 1986 3,928<F6>
Manager of WZOE, Inc., a
commercial radio broadcasting
company
CLASS I CONTINUING DIRECTORS -- TERM EXPIRES IN 1999
Craig O. Wesner General Manger of Bureau 55 1997 3,884
Services Company
Don S. Browning President of Browning Ford, 56 1983 8,182
Inc., a Ford new car and truck
dealer, and President of
Browning Chrysler, Inc., a
Chrysler new car and truck
dealer
Donald E. Grubb Farmer 56 1991 4,720<F7>
Ervin I. Pietsch Vice President, Corporate 56 1993 2,653
Quality, Ideal Electrical
Products
<FN>
<F1> All directors and executive officers of the Company as a group
beneficially own 60,265 shares of Common Stock, 2.21% of the outstanding
Common Stock.
<F2> Includes 1,552 shares held by his wife and 390 held by or in custody for
is sons.
<F3> Includes 700 shares held by his wife.
<F4> Includes 6,023 shares held in trust for which Dr. Hutchinson is the
trustee and beneficiary.
<F5> Includes 450 shares held in trust and 2,000 shares held by his wife.
<F6> Includes 243 shares held by his wife.
<F7> Includes 725 shares held by his wife.
</FN>
</TABLE>
<PAGE> 6
BOARD OF DIRECTOR MEETINGS AND COMMITTEES
The Board of Directors held eight meetings during 1996. The Board of
Directors has an Executive Committee and an Audit Committee, and the
Board as a whole operates as a committee to nominate directors. Each
director of the Company attended at least 75% of the meetings of the
Board of Directors and the Committees on which he served.
The Executive Committee is authorized, to the extent permitted by law, to
act on behalf of the Board of Directors of the Company in the interim
between meetings of the Board. Directors Thomas R. Lasier, Don S.
Browning, Tony J. Sorcic and Stephen W. Samet are members of the
Executive Committee. The Committee did not meet during 1996.
The Audit Committee has the responsibility for reviewing the scope of
internal and external audit procedures, reviewing the results of internal
and external audits conducted with respect to the Company and Citizens
Bank and periodically reporting on such results to the Board of
Directors. Directors Don S. Browning, Stephen W. Samet and Craig O.
Wesner are members of the Audit Committee. The Committee met four times
during 1996.
<PAGE> 7
The Board of Directors of Citizens Bank held 26 meetings during 1996.
The Board of Directors of Citizens Bank has Auditing & Accounting, Trust
Auditing & Accounting, Loan, Trust & Farm Management, Marketing & Sales
Management, CRA & Compliance, Personnel, Policy & Salary, Executive and
Investment & Funds Management Committees. The Committees collectively
held a total of 61 meetings during 1996. Each director of Citizens Bank
attended at least 75% of the meetings of the Citizens Bank Board of
Directors and the Committees on which he served.
COMPENSATION OF DIRECTORS
Each director of the Company who is not also an employee of the Company
or an employee or director of Citizens Bank received a $250 fee for each
Board meeting attended. Each director of the Company who is also a
director of Citizens Bank and who is not an employee of the Company or
Citizens Bank received a $50 fee for each Board meeting of the Company
attended in 1996. Each director of the Company, other than Messrs.
Pietsch and Ernat, is also a director of Citizens Bank.
During 1996, each director of Citizens Bank who is not also an employee
was paid a retainer ($9,500 per annum) plus a fee for each Board and
committee meeting attended. Each director of Citizens Bank who is not
also an employee, other than the Chairman of the Board, received a $25
fee for each Citizens Bank Board meeting and committee meeting attended
in 1996. After attending five meetings of the same committee, the
director received a $50 fee for each subsequent meeting of the same
committee in 1996. The Chairman of the Board of Citizens Bank received a
$100 fee for each meeting of the Board attended in 1996. In addition,
Citizens Bank paid $1,720 of organization dues on behalf of the Chairman
of the Board of Citizens Bank during 1996.
EXECUTIVE COMPENSATION
SUMMARY
The following table summarizes compensation for services to the Company
and Citizens Bank for the years ended December 31, 1996, 1995 and 1994
paid to or earned by the Chief Executive Officer of the Company and the
other executive officer of the Company whose salary and bonus exceeded
$100,000 for the year ended December 31, 1996.
<PAGE> 8
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
All other
compen-
sation($)<F1>
Name and Principal
Position Year Salary ($) Bonus($)
<S> <C> <C> <C> <C>
D. E. Van Ordstrand<F2> 1996 $ 85,867 $12,150<F3> $2,576
President and Chief Executive 1995 147,754 0 4,433
Officer 1994 157,796 5,000 4,500
Tony J. Sorcic 1996 159,020 11,000 4,440
1995 123,420 0 3,703
1994 106,520 4,000 3,190
<FN>
<1> The compensation reported represents Company matching
contributions to the Company 401(k) Plan.
<2> Mr. Van Ordstrand retired as President of Citizens Bank as
of October 1, 1995. Mr. Van Ordstrand retired as President and Chief
Executive Officer of the Company as of December 31, 1996. Mr. Sorcic was
appointed President and Chief Executive Officer of the Company as of
January 1, 1997.
<3> The compensation reported represents the value of Mr. Van
Ordstrand's company car, which was awarded to him in connection with his
retirement in lieu of a cash bonus.
</FN>
</TABLE>
EMPLOYMENT AGREEMENTS
Mr. Sorcic has an employment agreement with the Company which provides for
his full-time employment in his present capacity at a base compensation of
$141,700 per year, or such increased amount as the Board of Directors of
Citizens Bank may determine, plus fringe and health and welfare benefits,
effective October 1, 1995. His term of employment is continuously extended
so as to have a remaining term of three years, unless terminated sooner as
a result of good cause or for good reason (each as defined in the
Agreement).
Upon certain changes in control of the Company or Citizens Bank, Mr. Sorcic
would be entitled to receive a lump sum payment equal to his monthly salary
times the greater of twenty-four and the balance of the term under the
Agreement (the "Severance Period"). Mr. Sorcic also would be entitled to
receive all benefits accrued under any incentive and retirement plan of the
Company and, during the Severance Period, he and his dependents would
continue to be covered by all welfare plans of the Company.
<PAGE> 9
COMPENSATION COMMITTEE REPORT
The Company does not have a Compensation Committee of the Board of
Directors. During 1996, the Board of Directors established the
compensation procedures and policies and determined the compensation of the
President and of the Chief Executive Officer of the Company. The Executive
Vice President of the Company is also the President of Citizens Bank and,
as a result, he receives compensation only from Citizens Bank for services
to the Company and Citizens Bank. During 1996, the Directors' Personnel
Policy and Salary Committee of Citizens Bank (the "Committee") established
the compensation procedures and policies for Citizens Bank and determined
the compensation of all of the executive officers of Citizens Bank.
Messrs. Thomas R. Lasier, Stephen W. Samet and Craig Wesner were members of
the Committee during 1996. All decisions by the Committee are reviewed and
approved by the Board of Directors of Citizens Bank.
The compensation philosophy and objectives of the Company and Citizens Bank
include attracting and retaining the best possible executive talent,
motivating executive officers to achieve the performance objectives of the
Company and Citizens Bank, rewarding individual performance and
contributions and linking executive and stockholder interests.
Executive compensation consists of two components: base salary and bonus,
each of which is intended to complement the other and, taken together, to
satisfy the compensation objectives of the Company and Citizens Bank as the
case may be. With respect to the base salaries of each of the executive
officers of the Company, the Board with respect to the President and Chief
Executive Officer, and the Committee with respect to the executive officers
of Citizens Bank, annually consider the job performance of the officer and
the average salaries as published by the Illinois Bankers Association and
the Bank Administrative Institute of all of those persons holding
comparable positions at comparably sized bank holding companies and banks,
as the case may be, in determining each officer's base salary. The base
salaries of the officers are targeted at the average base salary levels of
the comparative compensation group. The banks included in the Illinois
Bankers Association and Bank Administrative Institute publications are not
the same as the banks quoted in The Nasdaq Stock Market.
Bonuses are awarded to the President and Chief Executive Officer of the
Company in the discretion of the Board. Bonuses are awarded to executive
officers of Citizens Bank in the discretion of the Committee. In
determining whether to award a bonus to an executive officer, the Committee
considers the officer's job and officer call program performance, and the
officer's community involvement. In addition to these factors, in
determining whether to award a bonus to the President and Chief Executive
Officer, the Board also considers earnings and profitability of Citizens
Bank and the regulatory approval rating of Citizens Bank. The practice of
awarding bonuses is subjective. In connection with his retirement, the
Board awarded Mr. Van Ordstrand his company car in lieu of a cash bonus in
1996. The amount set forth as Mr. Van Ordstrand's bonus in the Summary
Compensation Table is the value of said car.
This report is submitted on behalf of the Board of Directors of the
Company: Don S. Browning, John Ernat, Donald E. Grubb, Tony J. Sorcic,
Thomas M. Longman, Dr. Harold C. Hutchinson, Jr., Thomas R. Lasier, Ervin
I. Pietsch, Stephen W. Samet and Craig O. Wesner.
<PAGE> 10
COMMON STOCK PRICE PERFORMANCE GRAPH
The following Common Stock price performance graph compares the monthly
change in the Company's cumulative total stockholder returns on its Common
Stock commencing May 8, 1992, the effective date of the Company's initial
public offering, with the cumulative total return of stock traded on The
Nasdaq Stock Market and all banks traded on The Nasdaq Stock Market. The
amounts shown assume the reinvestment of dividends.
<TABLE>
<CAPTION>
CRSP TOTAL RETURNS INDEX FOR: 05/08/92 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96
- ---------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Princeton National Bancorp, Inc. 100.0 111.3 152.3 130.6 181.1 203.7
Nasdaq Stock Market (US Companies) 100.0 116.5 133.8 130.8 184.9 227.4
Nasdaq Bank Stocks 100.0 123.3 140.6 140.1 208.6 275.8
SIC 6020-6029, 6710-6719 US & Foreign
</TABLE>
As noted above, the Company's Common Stock began trading on The Nasdaq
Stock Market under the symbol PNBC on May 8, 1992. Since that date, the
Company's Common Stock has been lightly traded. On December 31, 1996 and
February 10, 1997, the Record Date, the bid price for the Common Stock as
quoted by The Chicago Corporation was $18.50 and 17.50, respectively.
PROPOSAL 2 - AMENDMENT TO CERTIFICATE TO
INCREASE AUTHORIZED COMMON STOCK
The Board of Directors has unanimously approved, and recommends that
stockholders adopt, an amendment to Article FOURTH of the Certificate to
increase the number of authorized shares of Common Stock from 4 million to
7 million. If the proposed amendment is adopted, the first sentence of
Article FOURTH would be amended to read as follows:
FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is seven million (7,000,000) shares of
Common Stock, par value $5.00 per share.
The Company currently is authorized to issue 4 million shares of Common
Stock, of which 2,723,966 shares of Common Stock were issued and
outstanding as of February 10, 1997. In addition, as of February 10, 1997,
the Company had 6,924 shares of Common Stock reserved for issuance under
the Company's stock purchase plan and 29,055 shares of Common Stock were
held in its treasury, leaving 1,240,055 shares of authorized Common Stock
available for issuance. Adoption of the proposed amendment would increase
the number of shares of Common Stock available for issuance to 5,240,055.
<PAGE> 11
The additional shares of Common Stock for which authorization is sought
would be part of the existing class of Common Stock and, if and when
issued, would have the same rights and privileges as the shares of Common
Stock presently outstanding. Holders of the Company's Common Stock do not
have preemptive rights to subscribe for and purchase any new or additional
issue of Common Stock or securities convertible into Common Stock.
The Board of Directors believes that the increase in the number of
authorized shares of Common Stock is in the best interests of the Company
and its stockholders. The purpose of increasing the number of authorized
shares of Common Stock is to have shares available for issuance for such
corporate purposes as the Board of Directors may determine in its
discretion, including, without limitation, future acquisitions, investment
opportunities, stock splits, stock dividends or other distributions,
conversion of convertible securities, future financings and other corporate
purposes. Except for an employee stock purchase plan, the Company has no
agreements or understandings regarding the issuance of additional shares of
Common Stock.
Under the provisions of the Delaware General Corporation Law, a board of
directors generally may issue authorized but unissued shares of common
stock without stockholder approval. A substantial number of authorized but
unissued shares of Common Stock not reserved for specific purposes will
allow the Company to take prompt action with respect to corporate
opportunities that develop, without the delay and expense of convening a
special meeting of stockholders. The issuance of additional shares of
Common Stock may, depending upon the circumstances under which such shares
are issued, reduce stockholders' equity per share and may reduce the
percentage of ownership of Common Stock of existing stockholders. It is
not the present intention of the Board of Directors to seek stockholder
approval prior to any issuance of additional shares of Common Stock unless
required by law or the rules of The Nasdaq Stock Market, or any other
market or stock exchange on which the Common Stock may be listed.
Although the Company currently has no reason to believe that a takeover
attempt is likely to occur, increasing the number of authorized shares of
Common Stock may provide the Company with the means of discouraging any
such attempt. Such additional shares of Common Stock could be used in the
future, through private sales to purchasers allied with management or
otherwise, to dilute the stock ownership of persons seeking to obtain
control of the Company, thus making less likely a change in control of the
Company, whether or not favored by a majority of unaffiliated stockholders,
with the possible effect of deterring an offer for the Company at a
substantial premium over the current market price of the Common Stock. The
Company has no present intention to issue securities for any such purpose.
The Company's Certificate contains certain provisions which may be viewed
as having an antitakeover effect. The Certificate provides that any
proposed merger or consolidation of the Company with any other corporation
must be authorized by the affirmative vote of at least two-thirds of the
stockholders if a majority of the Board of Directors had not recommended
such merger or consolidation for stockholder approval. The Certificate
contains a provision pursuant to which the Company elected to be governed
by Section 203 of the Delaware General Corporation Law. Section 203
restricts certain forms of business combinations with an "Interested
Stockholder" for a period of three years from the date that such a person
became an "Interested Stockholder" unless (i) prior to such date, the Board
<PAGE> 12
of Directors approved either the business combination or the transaction
which resulted in the stockholder's becoming an "Interested Stockholder,"
(ii) upon consummation of the transaction, the Interested Stockholder owns
at least 85% of the voting stock of the corporation (excluding shares held
by management directors and under certain types of employee stock plans),
or (iii) on or subsequent to such date, the business combination is
approved by the Board of Directors and authorized at an annual or special
meeting of the stockholders by the affirmative vote of at least 66-2/3% of
the outstanding voting stock, other than stock owned by the "Interested
Stockholder." An "Interested Stockholder" is defined as any individual,
corporation, partnership, unincorporated association or other entity which
(x) owns 15% or more of the outstanding voting stock of the corporation,
(y) is an affiliate or associate of the corporation and was the owner of
15% or more of the outstanding voting stock of the corporation at any time
within the three-year period immediately prior to the date on which it is
sought to be determined whether such person is an Interested Stockholder,
and (z) the affiliates or associates of such a person.
The Certificate also classifies the Board into three classes and provides
that vacancies on the Board of Directors are to be filled by a majority
vote of directors and that directors so chosen shall hold office until the
end of the full term of the class in which the vacancy occurred. A vote of
the holders of 80% of the Company's outstanding voting stock is required to
amend these provisions. Under the Delaware General Corporation Law and the
Certificate, directors of the Company may only be removed for cause. The
Certificate also contains provisions that may reduce surprise and
disruptive tactics at stockholders' meetings. The Certificate provides
that no action may be taken by stockholders except at an annual or special
meeting. Each of these provisions tends to make a change in control of the
Board of Directors more difficult or time consuming.
The proposed amendment to the Certificate is not being recommended for the
purpose of deterring a possible change in control of the Company or in
response to any specific effort of which the Company is aware to obtain
control of the Company, nor does the Board of Directors currently intend to
propose to stockholders any amendments which may have the effect of
discouraging takeover attempts.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock is required to approve the amendment to the Certificate to
increase the number of authorized shares of Common Stock of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ADOPTION OF THE
AMENDMENT TO THE CERTIFICATE TO INCREASE THE AUTHORIZED SHARES OF COMMON
STOCK FROM 4 MILLION TO 7 MILLION.
<PAGE> 13
CERTAIN TRANSACTIONS
Several of the Company's directors and their affiliates, including
corporations and firms of which they are officers or in which they or
members of their families have an ownership interest, are customers of
Citizens Bank. These persons, corporations and firms have had transactions
in the ordinary course of business with Citizens Bank, including borrowings
of material amounts, all of which, in the opinion of management, were on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with unaffiliated
persons and did not involve more than the normal risk of collectibility or
present other unfavorable features. It is the policy of Citizens Bank not
to extend credit to certain designated executive officers thereof.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon its review of Forms 3, 4 and 5 and any amendment thereto
furnished to the Company pursuant to Rule 16a-3(e) of the Securities
Exchange Act of 1934, as amended, and written representations from the
directors and executive officers that no other reports were required, the
Company is not aware of any director, officer or beneficial holder of 10%
of its Common Stock that failed to file any such reports on a timely basis
during 1996, except that Mr. Grubb filed one Form 5 reporting three
transactions that should have been reported on Form 4 and Messrs. Ernat and
Pietsch each filed one Form 4 reporting one transaction late.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of February 10, 1997 the only persons or groups who are known to the
Company to be the beneficial owners of more than 5% of the Common Stock
were:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT AND NATURE OF BENEFICIAL PERCENT OF CLASS
OWNERSHIP
<S> <C> <C>
Citizens Bank's Trust Department
606 South Main Street 281,903<F1> 10.3
Princeton, Illinois 61356
Principal Mutual Life Insurance Company
711 High Street 259,000 9.5
Des Moines, Iowa 50392-0088
Invista Capital Management, Inc.
699 Walnut - 1500 Hub Tower 226,000 8.2
Des Moines, Iowa 50309
________________________
<FN>
<F1> The trust department holds Common Stock in a fiduciary capacity under
the nominee name of Jesco & Co. The trust department's policy is to pass the
power to vote the shares held by it to the beneficiaries or co-fiduciaries of
the trust accounts, but in certain cases the beneficiaries or co-fiduciaries
request the trust department to vote their Common Stock by proxy.
</FN>
</TABLE>
<PAGE> 14
1997 ANNUAL MEETING
Any stockholder who intends to present a proposal at the 1998 Annual
Meeting of Stockholders must submit the proposal in writing to the Company
on or before November 4, 1997, in order for the proposal to be eligible for
inclusion in the Company's proxy statement and form of proxy for that
meeting.
OTHER MATTERS
Management of the Company does not intend to present any other matters for
action at the annual meeting, and the management has not been informed that
other persons intend to present any other matters for action at the
meeting. However, if any other matters should properly come before the
meeting, the persons named in the accompanying proxy intend to vote
thereon, pursuant to the proxy, in accordance with the recommendation of
the management of the Company.
By Order of the Board of Directors,
Lou Ann Birkey
Secretary
March 5, 1997
<PAGE> 15
PRELIMINARY COPY
PRINCETON NATIONAL BANCORP, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
APRIL 8, 1997
- PLEASE SIGN AND RETURN IMMEDIATELY -
The undersigned hereby appoints Lawrence DeVore, Roger Swan and Howard
Trimble or any of them as the attorneys and proxies of the undersigned,
with full power of substitution, to represent and vote all shares of common
stock of Princeton National Bancorp, Inc. (the "Company"), standing in the
name of the undersigned at the close of business on February 10, 1997, at
the Annual Meeting of Stockholders of the Company to be held at The
Galleria, 1659 North Main Street, Princeton, Illinois, at 10 a.m., on
Tuesday, April 8, 1997 or at any adjournment or postponement thereof, with
all the powers that the undersigned would possess if personally present on
all matters coming before said meeting, as follows:
(1) Election of directors.
____ FOR all nominees listed below ____ WITHHOLD AUTHORITY
(other than any nominee whose to vote for all nominees
name has been lined out) listed below
Class II (2000)
----------------
John Ernat
Tony J. Sorcic
Thomas M. Longman
YOU MAY WITHHOLD AUTHORITY TO VOTE FOR ANY OF THE ABOVE
NAMED NOMINEES BY LINING OUT THAT NOMINEE'S NAME.
(To be signed and dated on the reverse side)
------ -----
<PAGE> 16
(2) Approval of the amendment to the Amended and Restated Certificate of
Incorporation of the Company to increase the number of authorized shares of
Common Stock from 4,000,000 to 7,000,000.
____ FOR ____ AGAINST ____ ABSTAIN
(3) In their discretion, upon such other matters as may properly come before
the Annual Meeting.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR election of
directors and FOR Proposal 2.
Please fill in, date and sign this proxy and return it in the enclosed
envelope. When signing as an executor, administrator, trustee, guardian,
custodian, corporate officer or in any capacity other than individually,
give your full title as such. If stock is held jointly, each joint owner
should sign this proxy.
Date:
--------------------------------------
--------------------------------------
(Stockholder's Signature)
-------------------------------------
(Stockholder's Signature)
The signer hereby revokes all proxies heretofore given by the signer to
vote at said meeting or any adjournments thereof.
