5 comments on “2nd quarter 2012 call report

  1. If I’m reading it correctly, the bank lost $523K and equity dropped by $4,878K. Not good. This report is for the bank, not the holding company (PNBC), so it would exclude the TARP bailout.

    • TARP funds were invested into the Bank back in 2009, the holding company is responsible for any repayment. The main number to be concerned with is in Schedule RC-R. That would be the Tier 1 capital percentage which went from 2.38 at March 31 to 2.12 a,t June 30. According to inside sources, the FDIC will act if this ratio falls below 2 percent. The only way to increase this ratio, other than some capital contribution, is to make money which is clearly not happening. A Well capitalized bank would have a Tier 1 ratio of 6 percent which means a helluva capital contribution!

  2. The same minimum capital ratio requirements apply to BOTH the bank and the holding company. The bank, on a stand-alone basis will always look better than consolidated results.

  3. I’m losing track of time, but wasn’t it about two months ago that the bank announced they were embarked on three-pronged study to identify the preferred approach for increasing capital? And they expected to have results within about 30 days?

    Tom Ogaard and other officers have said at the last two or more annual meetings that they couldn’t “earn” their way out of their predicament. But, if they keep losing money, there seems to be no viable solution.

  4. Actually the FDIC is not the decision maker on closing this bank. The OCC has the final authority and would name the FDIC as the receiver. Also, since March 31st of this year, there have been 4 banks closed with Tier 1 capital over 2%. Also, remember that the holding company has negative Tier 1, due to the TARP transaction. This will play highly into the decision making process, when the OCC takes any further action. I think that the OCC review that just happened will probably not have a significant impact on future write downs or adjustments, as my guess would be that this quarters statement reflects anything they thought would be needed. One point of interest, is that the OCC will not be as quick to act on a bank that has a holding company on the hook for $27,000,000 in TARP money and interest due, if they do not believe that the liquidation will result in any recovery of those funds. On the other hand, they may pull the trigger quicker to limit the exposure. So it is a double edged sword. Holding company, basically insolvent, bank treading water but sinking slowly. T.O. was right. They cannot earn their way out of this situation. The other issue is with the marketability of this bank…. the geographic location. Not really hot for a merger. It is not a small town bank that can easily be assumed by the neighboring town’s bank. And, it is not probably is not big enough bait for anyone large in Chicago, wanting to assimilate a Princeton bank.
    No disrespect to anyone in Princeton….
    Just a side note, to all you holding long on the stock. If they do pull the trigger on the bank, take what you can get as quickly as possible, because my guess is that the holding company will 11 very quickly thereafter….

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