-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AO3Xl+B5WRyuGBTBNLb3a7trMUjKjsmu6eNBVTvQAB0VPHthWWmBrFGvq5N2btiJ Wn2T5+uAzTbXButkoGgkTw== 0000950124-08-000119.txt : 20080327 0000950124-08-000119.hdr.sgml : 20080327 20080111151145 ACCESSION NUMBER: 0000950124-08-000119 CONFORMED SUBMISSION TYPE: CORRESP PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20080111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRINCETON NATIONAL BANCORP INC CENTRAL INDEX KEY: 0000707855 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 363210283 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: CORRESP BUSINESS ADDRESS: STREET 1: 606 S MAIN ST CITY: PRINCETON STATE: IL ZIP: 61356 BUSINESS PHONE: 8158754444 CORRESP 1 filename1.htm corresp
 

January 11, 2008
John P. Nolan
Accounting Branch Chief
Division of Corporation Finance
U.S. Securities and Exchange Commission
Mail Stop 4561
Washington, D.C. 20549
  RE:   Princeton National Bancorp, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2006
Forms 10-Q for the Quarterly Periods ended March 31, 2007,
June 30, 2007, and September 30, 2007
File No. 000-20050
Dear Mr. Nolan:
This correspondence is in response to your letter dated December 27, 2007 concerning Princeton National Bancorp Inc.’s (“The Company”) Form 10-K for the Fiscal Year Ended December 31, 2006 and Form 10-Q for the Quarters Ended March 31, 2007, June 30, 2007, and September 30, 2007. For ease of reference, we have repeated your comment below and our response to your comment follows immediately thereafter.
Form 10-K for the Fiscal Year Ended December 31, 2006:
Exhibit 13 — Portions of 2006 Annual Report to Stockholders
Consolidated Financial Statements
     Note 1 — Summary of Significant Accounting Policies
     Stock Options, page 16
1. We note your disclosure that effective December 31, 2005 the company accelerated the vesting of all outstanding unvested options, that all of the unvested options were in the money at the date vesting was accelerated, and that no compensation expense was recognized from the vesting decision. Please provide us with your analysis, including any supporting calculations, describing how you considered the guidance in FIN 44 in determining that you did not need to recognize compensation expense due to the acceleration.

 

 

Management’s Response:
Prior to January 1, 2006, the Company accounted for stock options under APB No. 25 and did not recognize the related compensation expense in the financial statements as the exercise price was the stock price at the date of the respective awards. In accordance with SFAS 123, the Company disclosed the related compensation cost, net of income tax effect, and the pro-forma effect to net income and earnings per share in a footnote to the financial statements. The adoption of SFAS 123R by the Company did not occur until January 1, 2006; therefore, the rules of SFAS 123R did not apply in December 2005 at the time the Company’s Personnel Policy and Salary Committee of the Board of Directors authorized the resolution to accelerate the vesting of all outstanding unvested stock options granted prior to December 31, 2005. By accelerating the vesting of the stock options, the Company estimated approximately $925,000 of future compensation was eliminated which would have been recognized in future years with the adoption of SFAS 123R. The resolution passed by the Personnel Policy and Salary Committee of the Board of Directors only accelerated the vesting of the stock options granted prior to December 31, 2005. The exercise price and remaining terms of each of the accelerated options remained the same. The acceleration was not done in contemplation of benefiting any individuals that would have otherwise been forfeited during the original vesting period pursuant to the original terms, and the impact of individuals retiring prior to the original vesting period was considered. The modification did not renew or increase the life of the options pursuant to Item K of Staff Accounting Bulletin No. 107 and paragraphs 32 through 36 of FASB Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation. A copy of the resolution of December 19, 2005 is attached for your reference along with the worksheet calculating the amount of the future compensation.
In addition, per your request, the Company hereby acknowledges that:
  •   The Company is responsible for the adequacy and accuracy of the disclosure in the filing;
 
  •   Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking action with respect to the filing; and
 
  •   The Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
             
Sincerely,
Princeton National Bancorp, Inc.
           
 
            
/s/ Tony J. Sorcic
      /s/ Todd D. Fanning    
 
Tony J. Sorcic
     
 
Todd D. Fanning 		   
President and Chief Executive Officer
      Senior Vice President and Chief Financial Officer    

 

 

December 19, 2005
Resolution to Fully-Vest Outstanding Stock Options
     “WHEREAS, Princeton National Bancorp, Inc. (the “Corporation”) has established the Princeton National Bancorp, Inc. Amended and Restated Stock Option Plan and the Princeton National Bancorp, Inc. 2003 Stock Option Plan (the “Stock Option Plans”) for its officers, employees and directors that provides for the grant to officers, employees and directors of the option to purchase common stock of the Corporation; and
     WHEREAS, the Corporation has previously awarded stock options to certain officers, employees and directors and the Board wishes to approve amendments to all outstanding options to provide that they shall become fully exercisable as of December 19, 2005.
     NOW, THEREFORE BE IT RESOLVED that effective December 19, 2005, previously granted pursuant to the Stock Option Plans that remain outstanding shall be fully exercisable.
     FURTHER RESOLVED, that the appropriate officers of the Corporation are authorized and directed to do any and all things necessary to effectuate the intent of these resolutions.”

 

 

     
Princeton National Bancorp, Inc.
  TF
Pro-Forma Net Income Impact — FAS 123 (Alternative Calculation)
  2/23/2006
December 31, 2005
    
                                                                         
    1998     1999     2000     2001     2002     2003     2004     2005        
    Grant     Grant     Grant     Grant     Grant     Grant     Grant     Grant     TOTAL  
         
Number of Options, outstanding
12/31-04
     1,650       2,500       7,134       42,600       70,500       72,400       74,400       0       271,184  
Number of Options, outstanding
12/31-05
     1,050       1,100       4,634       13,000       60,101       69,733       72,400       80,700       302,718  
Vesting Period (Years)
     3       3       3       3       3       3       3       3          
Fair Value @ Grant
   $ 6.49     $ 3.99     $ 3.61     $ 6.77     $ 9.05     $ 12.73     $ 13.03     $ 6.07          
Exercise Price
   $ 17.19     $ 11.19     $ 11.94     $ 16.21     $ 21.15     $ 28.56     $ 28.83     $ 33.25          
Net Income Impact Per Year
   $ 2,272     $ 1,463     $ 5,576     $ 29,337     $ 181,305     $ 295,900     $ 314,554     $ 163,283          
 
Future compensation cost to be eliminated by fully vesting 2003 and 2004 options
                                           $ 295,900.36     $ 629,107.73             $ 925,008.10  
 
                                                                      
(note: the 1998-2002 grants are fully vested)
                                           (1 year left)   (2 years left)                
PRIOR DISCLOSURE
         
Average assumed proceeds from exercise of options
     7,432,766  
 
        
Average unrecognized compensation cost related to future services
     1,414,857  
 
        
Tax benefits credited to equity on assumed exercise based on average market price less weighted-average exercise price
     0  
 
      
 
        
Total assumed proceeds
     8,847,623  
 
        
Shares assumed issued upon exercise of options
     286,951  
Shares repurchased at average market price ($33.25)
     266,094  
 
      
 
        
Incremental Shares
     20,857  
 
      
 
        
Reported 12/31 net income
   $ 7,574  
Compensation cost
     (867 )
 
      
 
        
Pro Forma Net Income
     6,707  
 
        
Basic Weighted Avg. Shares
     3,174,321  
Diluted Weighted Avg. Shares
     3,201,154  
 
        
Reported Basic EPS
   $ 2.39  
Pro Forma Basic EPS
   $ 2.11  
 
        
Reported Diluted EPS
   $ 2.37  
Pro-Forma Diluted EPS
   $ 2.10  

 

 

STOCK OPTIONS GRANTED IN UNDER THE
PRINCETON NATIONAL BANCORP, INC.
STOCK OPTION PLAN
REMAINING OPTIONS AS OF DECEMBER 31, 2005
                                                                                                 
                                                    Compensation Cost             Compensation Cost        
                                                    Calculation             Calculation        
    fully vested     fully vested     fully vested     fully vested     fully vested     2/3 vested     2003             1/3 vested     2004              
    1998     1999     2000     2001     2002     2003     Fair Value     One year     2004     Fair Value     Two years        
    12/14/1998     12/27/1999     12/26/2000     12/31/2001     12/31/2002     12/31/2003     @ Grant     remaining     12/31/2004     @ Grant     remaining        
Optionee   $17.19     $11.19     $11.94     $16.21     $21.15     $28.56     $12.73     to be vested     $28.83     $13.03     to be vested     TOTAL  
Optionee # 1
     0       0       0       0       700       2000     $ 25,460.00     $ 8,486.67       2000     $ 26,068.00     $ 17,378.67     $ 25,865.33  
Optionee # 2
     0       0       0       0       0       0                       0                          
Optionee # 3
     0       0       0       1500       2000       2000     $ 25,460.00     $ 8,486.67       2000     $ 26,068.00     $ 17,378.67     $ 25,865.33  
Optionee # 4
     0       0       0       0       2000       2000     $ 25,460.00     $ 8,486.67       2000     $ 26,068.00     $ 17,378.67     $ 25,865.33  
Optionee # 5
     0       0       0       0       2000       2000     $ 25,460.00     $ 8,486.67       2000     $ 26,068.00     $ 17,378.67     $ 25,865.33  
Optionee # 6
     0       0       0       0       666       2000     $ 25,460.00     $ 8,486.67       2000     $ 26,068.00     $ 17,378.67     $ 25,865.33  
Optionee # 7
     0       0       0       0       0       0                       0                          
Optionee # 8
     0       0       0       0       2000       2000     $ 25,460.00     $ 8,486.67       2000     $ 26,068.00     $ 17,378.67     $ 25,865.33  
Optionee # 9
     0       0       1000       1500       2000       2000     $ 25,460.00     $ 8,486.67       2000     $ 26,068.00     $ 17,378.67     $ 25,865.33  
Optionee # 10
     300       700       1000       1500       2000       2000     $ 25,460.00     $ 8,486.67       2000     $ 26,068.00     $ 17,378.67     $ 25,865.33  
Optionee # 11
     0       0       0       1500       2000       2000     $ 25,460.00     $ 8,486.67       2000     $ 26,068.00     $ 17,378.67     $ 25,865.33  
Optionee # 12
     0       0       1000       1500       2000       2000     $ 25,460.00     $ 8,486.67       2000     $ 26,068.00     $ 17,378.67     $ 25,865.33  
Optionee # 13
     0       0       0       0       20000       20000     $ 254,600.00     $ 84,866.67       20000     $ 260,680.00     $ 173,786.67     $ 258,653.33  
Optionee # 14
     0       0       734       2000       4000       4000     $ 50,920.00     $ 16,973.33       4000     $ 52,136.00     $ 34,757.33     $ 51,730.67  
Optionee # 15
     0       0       0       0       0       0                       1000     $ 13,034.00     $ 8,689.33     $ 8,689.33  
Optionee # 16
     0       0       0       0       667       2000     $ 25,460.00     $ 8,486.67       2000     $ 26,068.00     $ 17,378.67     $ 25,865.33  
Optionee # 17
     0       0       0       0       2000       2000     $ 25,460.00     $ 8,486.67       2000     $ 26,068.00     $ 17,378.67     $ 25,865.33  
Optionee # 18
     0       0       0       0       666       1333     $ 16,969.09     $ 5,656.36       2000     $ 26,068.00     $ 17,378.67     $ 23,035.03  
Optionee # 19
     0       0       0       0       2000       2000     $ 25,460.00     $ 8,486.67       2000     $ 26,068.00     $ 17,378.67     $ 25,865.33  
Optionee # 20
     0       0       0       0       1300       2000     $ 25,460.00     $ 8,486.67       2000     $ 26,068.00     $ 17,378.67     $ 25,865.33  
Optionee # 21
     250       400       600       800       1000       1000     $ 12,730.00     $ 4,243.33       1000     $ 13,034.00     $ 8,689.33     $ 12,932.67  
Optionee # 22
     0       0       0       0       0       0                       1000     $ 13,034.00     $ 8,689.33     $ 8,689.33  
Optionee # 23
     0       0       0       0       700       700     $ 8,911.00     $ 2,970.33       700     $ 9,123.80     $ 6,082.53     $ 9,052.87  
Optionee # 24
     0       0       0       0       334       1000     $ 12,730.00     $ 4,243.33       1000     $ 13,034.00     $ 8,689.33     $ 12,932.67  
Optionee # 25
     0       0       0       0       500       500     $ 6,365.00     $ 2,121.67       500     $ 6,517.00     $ 4,344.67     $ 6,466.33  
Optionee # 26
     0       0       0       0       334       1000     $ 12,730.00     $ 4,243.33       1000     $ 13,034.00     $ 8,689.33     $ 12,932.67  
Optionee # 27
     500       0       0       800       1000       1000     $ 12,730.00     $ 4,243.33       1000     $ 13,034.00     $ 8,689.33     $ 12,932.67  
Optionee # 28
     0       0       0       500       1000       1000     $ 12,730.00     $ 4,243.33       1000     $ 13,034.00     $ 8,689.33     $ 12,932.67  
Optionee # 29
     0       0       0       0       0       0                       0                          
Optionee # 30
     0       0       100       800       1000       1000     $ 12,730.00     $ 4,243.33       1000     $ 13,034.00     $ 8,689.33     $ 12,932.67  
Optionee # 31
     0       0       0       0       333       1000     $ 12,730.00     $ 4,243.33       1000     $ 13,034.00     $ 8,689.33     $ 12,932.67  
Optionee # 32
     0       0       0       66       1000       1000     $ 12,730.00     $ 4,243.33       1000     $ 13,034.00     $ 8,689.33     $ 12,932.67  
Optionee # 33
     0       0       0       0       400       1200     $ 15,276.00     $ 5,092.00       1200     $ 15,640.80     $ 10,427.20     $ 15,519.20  
Optionee # 34
     0       0       0       0       500       500     $ 6,365.00     $ 2,121.67       500     $ 6,517.00     $ 4,344.67     $ 6,466.33  
Optionee # 35
     0       0       0       0       0       0                       0                          
Optionee # 36
     0       0       0       0       667       1000     $ 12,730.00     $ 4,243.33       1000     $ 13,034.00     $ 8,689.33     $ 12,932.67  
Optionee # 37
     0       0       0       0       1000       1000     $ 12,730.00     $ 4,243.33       1000     $ 13,034.00     $ 8,689.33     $ 12,932.67  
Optionee # 38
     0       0       0       0       500       500     $ 6,365.00     $ 2,121.67       500     $ 6,517.00     $ 4,344.67     $ 6,466.33  
Optionee # 39
     0       0       200       534       1000       1000     $ 12,730.00     $ 4,243.33       1000     $ 13,034.00     $ 8,689.33     $ 12,932.67  
Optionee # 40
     0       0       0       0       334       1000     $ 12,730.00     $ 4,243.33       1000     $ 13,034.00     $ 8,689.33     $ 12,932.67  
Optionee # 41
     0       0       0       0       500       500     $ 6,365.00     $ 2,121.67       500     $ 6,517.00     $ 4,344.67     $ 6,466.33  
Optionee # 42
     0       0       0       0       0       500     $ 6,365.00     $ 2,121.67       500     $ 6,517.00     $ 4,344.67     $ 6,466.33  
 
                                                                                                
REMAINING OPTIONS
     1,050       1,100       4,634       13,000       60,101       69,733                       72,400                          
 
                                                                                                
TOTAL COMPENSATION COSTS
                                                           $ 295,900.36                     $ 629,107.73     $ 925,008.10  
 
                                                                                              

 

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