Citizens First National Bank in Princeton, Ill., has been ordered by the Office of the Comptroller of the Currency to beef up its capital levels and clean up its loan portfolio.

Under the material definitive agreement dated Monday, the $1.1 billion-asset bank must maintain a total risk-based capital to risk-weighted assets ratio of at least 12% and a Tier 1 capital-to-assets ratio of at least 8%. As of June 30, Citizens had a total risk-based capital ratio of 10.42% and a Tier 1 risk-based capital ratio of 9.15%. according to Federal Deposit Insurance Corp. data.

The bank, a subsidiary of Princeton National Bancorp Inc., also must develop three-year strategic plans to address risk, earnings performance and credit quality, and it must implement a program to improve loan portfolio management. Its management also must provide to the board monthly reports about delinquent and problem loans.

At June 30, 12.2% of its loans were at least 90 days past due.

The order replaces a formal agreement the bank signed with the OCC in March 2010. The original agreement required Citizens to review its allowance for loan and lease losses and ensure its internal ratings of commercial credit in excess of $100,000 were accurate, among other things.

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