Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank,
with offices in Louisville and throughout central Kentucky, today
reported results for the third quarter and nine months ended
September 30, 2006. The Company reported net income of $3.8 million
and $10.6 million for the three months and nine months ended
September 30, 2006, respectively. This compares to net income of
$3.7 million and $10.6 million for the same periods in 2005.
Additionally, on an adjusted pro forma basis, this compares to net
income of $3.1 million and $9.1 million for the same periods in
2005. Basic and diluted earnings per share was $ .59 and $1.67 for
the three months and nine months ended September 30, 2006,
respectively, compared to $.63 and $1.80 for the same periods in
2005 and on an adjusted pro forma basis $.49 and $1.43 for the same
periods in 2005. The pro forma adjustments present the Company�s
2005 results as if its acquisition of minority interests in
subsidiary banks and the termination of its S corporation status,
which were effective on December 31, 2005, were in effect for all
of 2005. �We are pleased to report a continuing trend of earnings
growth and we are optimistic about the future of our Company,�
stated Maria L. Bouvette, President and Chief Executive Officer.
�We fully understand our responsibility to our shareholders and we
are very appreciative of their support for us.� Total assets
declined by $13.7 million during the quarter due to the utilization
of cash and cash equivalents for planned reductions in borrowings
and the non-renewal of national market certificates of deposit.
Loans increased by $2.9 million and core transactional deposit
accounts increased by $20.1 million. Other highlights for the third
quarter include the successful completion of the Company�s initial
public offering on September 22, 2006, the repayment of $9.5
million in debt incurred to acquire minority interests in 2005, and
an improvement in non-performing asset levels from June 30, 2006.
In its public offering, the Company issued 1,250,000 new shares at
a price of $24.00 per share. �Despite a flat yield curve, we
experienced only modest compression of our net interest margin
which remained strong at 3.95% and 4.00% for the quarter and year
to date, respectively,� said Bouvette. Net interest income was
$9,279,000 for the three months ended September 30, 2006, an
increase of $38,000, or 0.4%, compared with $9,241,000 for the same
period in 2005. Net interest income was $27,733,000 for the nine
months ended September 30, 2006, an increase of $1,148,000, or
4.3%, compared with $26,585,000 for the same period in 2005. The
overall increase in net interest income was attributable to an
increase in overall loan volume offset by the reduction in net
interest margin reflecting the effect of a flattening yield curve.
Provision for loan losses decreased $439,000 to $276,000 for the
three months ended September 30, 2006 and $739,000 to $1,029,000
for the nine months ended September 30, 2006 compared to the same
periods ended September 30, 2005. In connection with our
reorganization and consolidation of our loan review processes
during 2005, we conducted a thorough review of our loan portfolio
resulting in an increased provision for loan losses. We assess the
adequacy of our loan loss reserve each quarter and make the
appropriate provision for loan losses based on that assessment.
Non-interest income for the third quarter of 2006 decreased
$45,000, or 3.3%, from the third quarter of 2005. Non-interest
income for the nine months ended September 30, 2006 decreased
$328,000, or 7.6%, in comparison to the same period last year. The
decrease for both the third quarter and the first nine months of
2006 was primarily due to decreased income from service charges on
deposit accounts and gains on sales of government guaranteed loans,
reflecting the cyclical nature of originations and sales of this
type of loan. Service charges on deposit accounts decreased as a
result of changes in product fee structures that the Company
believes will make certain products more competitive, thereby
increasing product sales over time. These decreases in non-interest
income were partially offset by increased income from gains on
sales of loans originated for sale through the Bank�s mortgage
division, which we acquired in January 2006. Non-interest expense
for the quarter ended September 30, 2006 of $4.7 million
represented a 5.4% decrease from $4.9 million for the third quarter
of 2005. Non-interest expense for the nine months ended September
30, 2006 of $14.9 million represented a 1.1% increase from the
$14.8 million for the same period last year. The decrease in
non-interest expense for the quarter was primarily due to reduced
employee benefit costs resulting from a change in the Company�s
group health benefit plan effective on July 1, 2006 and an increase
in deferred direct loan origination costs. This decrease was
partially offset by the increased advertising cost in connection
with branding our Bank�s new name, PBI Bank. The primary factors
impacting non-interest expense for the nine month period were
additional employee compensation expenses relating to planned
growth in our lending staff; decreased group benefit plan costs;
and the increased advertising cost. In addition, the Company
implemented Statement of Financial Accounting Standards No. 123(r),
�Share-Based Payment� (SFAS No. 123(r)) during the first quarter of
2006 resulting in the recognition of $41,000 and $106,000 in
non-cash compensation expense in the third quarter and first nine
months of 2006, respectively. No such expense was recorded in the
comparative periods of 2005. Total assets for the third quarter
increased 3.5% to $999.7 million from $965.7 million at September
30, 2005. The Company�s loan portfolio increased 2.7% to $817.4
million from $795.6 million at September 30, 2005 primarily due to
in-house loan origination efforts of our lending staff. Deposits at
September 30, 2006 increased by 1.7% to $802.4 million from $789.3
million at September 30, 2005 primarily due to an increase in both
time deposits and transactional accounts from promotional efforts
throughout the period. In conclusion, Bouvette added �Overall we
were very pleased with our performance during the third quarter.
Although we did experience uncharacteristic paydown activity in our
loan portfolio, which limited our net loan growth, we believe
paydown levels have normalized going into the fourth quarter. We
are optimistic we have regained our growth momentum as indicated by
our robust loan production pipeline. We continue to see market
expansion opportunities and we remain focused on our strategic
initiatives.� PBIB-G Forward-Looking Statements Statements in this
press release relating to Porter Bancorp�s plans, objectives,
expectations or future performance are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are based on management�s
current expectations. Porter Bancorp�s actual results in future
periods may differ materially from those currently expected due to
various risks and uncertainties, including those discussed in the
�Risk Factors� section of the Company�s Form S-1 Registration
Statement (Reg. No. 333-133198) and subsequent periodic reports
filed with the Securities and Exchange Commission. The
forward-looking statements in this press release are made as of the
date of the release and Porter Bancorp does not assume any
responsibility to update these statements. Additional Information
Unaudited supplemental financial information for the third quarter
and nine months ending September 30, 2006 follows. PORTER BANCORP,
INC. AND SUBSIDIARY Unaudited Financial Information (in thousands,
except share and per share data) � Three Months Ended Nine Months
Ended September 30, September 30, 2006� 2005� 2006� 2005� Income
Statement Data Interest income $ 18,564� $ 15,903� $ 53,498� $
44,917� Interest expense 9,285� 6,662� 25,765� 18,332� Net interest
income 9,279� 9,241� 27,733� 26,585� Provision for loan losses 276�
715� 1,029� 1,768� Net interest income after provision for loan
losses 9,003� 8,526� 26,704� 24,817� Non-interest income 1,317�
1,362� 4,013� 4,341� Non-interest expense 4,653� 4,919� 14,940�
14,771� Income before minority interest 5,667� 4,969� 15,777�
14,387� Minority interest in net income of consolidated
subsidiaries -� 318� -� 996� Income before income taxes 5,667�
4,651� 15,777� 13,391� Income tax expense 1,858� 947� 5,135� 2,827�
Net income $ 3,809� $ 3,704� $ 10,642� $ 10,564� � Weighted average
shares (basis & diluted) 6,454,730� 5,868,224� 6,373,656�
5,868,224� � Basic and diluted earnings per share $ 0.59� $ 0.63� $
1.67� $ 1.80� Cash dividends declared per share $ 0.20� $ 0.48� $
0.60� $ 1.11� � Pro Forma Data(1) Net income: As reported $ 3,809�
$ 3,704� $ 10,642� $ 10,564� Adjustments: Add back minority
interests(2) -� 318� -� 996� Additional taxes(3) -� (743) -�
(2,065) Acquisition funding(4) -� (147) -� (440) Adjusted net
income $ 3,809� $ 3,132� $ 10,642� $ 9,055� � Weighted Average
Shares Outstanding As reported and as adjusted for stock split
6,454,730� 5,868,224� 6,373,656� 5,868,224� Shares issued in the
Ascencia transaction -� 464,223� -� 464,223� Adjusted shares
outstanding 6,454,730� 6,332,447� 6,373,656� 6,332,447� � Basic and
diluted earnings per share $ 0.59� $ 0.49� $ 1.67� $ 1.43� � (1)
The pro forma adjustments present the Company�s 2005 results as if
its acquisition of minority interests in subsidiary banks and the
termination of its S corporation status, which were effective on
December 31, 2005, were in effect for all of 2005. (2) This
adjustment reflects the minority interests in subsidiaries in a
corporate reorganization on December 31, 2005. (3) This adjustment
represents a tax rate of 34% applied to reported pre-tax income
less reported tax expense to reflect the conversion from Subchapter
S corporation to C corporation status effective December 31, 2005.
(4) Acquisition funding for the reorganization includes $9,500 in
senior notes at an annual 6% interest rate and $5,313 in cash at an
assumed annual 6% interest rate, net of tax at a 34% tax rate.
PORTER BANCORP, INC. AND SUBSIDIARY Unaudited Financial Information
(in thousands, except share and per share data) � Sept. June March
Dec. Sept. 2006� 2006� 2006� 2005� 2005� Balance Sheet Data (at
period end) Total assets $ 999,661� $ 1,013,372� $ 981,231� $
991,481� $ 965,668� Total loans 817,421� 814,489� 807,736� 791,951�
795,643� Non-interest bearing deposits 67,534� 66,064� 64,949�
62,379� 63,356� Interest bearing deposits 734,884� 746,126�
745,015� 744,200� 725,935� Stockholders� equity 105,806� 75,537�
73,968� 71,876� 69,497� Shares outstanding 7,620,497� 6,371,697�
6,372,047� 6,332,447� 5,868,224� Book value per share 13.88� 11.86�
11.61� 11.35� 11.84� Tangible book value per share 12.15� 9.95�
9.60� 9.32� 10.93� Three Months Ended Nine Months Ended September
30, September 30, 2006� 2005� 2006� 2005� Average Balance Sheet
Data Average assets $ 988,265� $ 955,716� $ 985,074� $ 932,519�
Average assets � pro forma(1) -� 961,397� -� 929,222� Average loans
811,838� 779,418� 807,104� 766,842� Average earning assets 940,831�
916,693� 936,821� 894,947� Average deposits 797,908� 779,376�
803,569� 765,539� Average long-term debt and advances 101,477�
77,431� 93,769� 76,182� Average interest bearing liabilities
837,381� 803,623� 836,859� 786,125� Average stockholders� equity
78,410� 69,396� 75,945� 68,487� Average stockholders� equity � pro
forma(1) -� 71,724� -� 69,778� � Performance Ratios Return on
average assets 1.53% 1.54% 1.44% 1.51% Return on average assets �
pro forma(1) -� 1.30� -� 1.30� Return on average equity 19.27�
21.18� 18.74� 20.62� Return on average equity � pro forma(1) -�
17.47� -� 17.30� Net interest margin, fully tax equivalent 3.95�
4.04� 4.00� 4.01� Efficiency ratio 43.91� 46.39� 47.06� 47.76� �
Asset Quality Data (at period end) Non-performing loans $ 9,972� $
8,868� Allowance for loan losses to non-performing loans 126.91%
140.21% Allowance for loan losses to portfolio loans 1.55� 1.56�
Non-performing loans to total portfolio loans 1.22� 1.11� � (1) As
adjusted on a pro forma basis to present the Company�s 2005 results
as if its acquisition of minority interests in subsidiary banks and
the termination of its S corporation status, which became effective
on December 31, 2005, were in effect for all of 2005. Porter
Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, with
offices in Louisville and throughout central Kentucky, today
reported results for the third quarter and nine months ended
September 30, 2006. The Company reported net income of $3.8 million
and $10.6 million for the three months and nine months ended
September 30, 2006, respectively. This compares to net income of
$3.7 million and $10.6 million for the same periods in 2005.
Additionally, on an adjusted pro forma basis, this compares to net
income of $3.1 million and $9.1 million for the same periods in
2005. Basic and diluted earnings per share was $ .59 and $1.67 for
the three months and nine months ended September 30, 2006,
respectively, compared to $.63 and $1.80 for the same periods in
2005 and on an adjusted pro forma basis $.49 and $1.43 for the same
periods in 2005. The pro forma adjustments present the Company's
2005 results as if its acquisition of minority interests in
subsidiary banks and the termination of its S corporation status,
which were effective on December 31, 2005, were in effect for all
of 2005. "We are pleased to report a continuing trend of earnings
growth and we are optimistic about the future of our Company,"
stated Maria L. Bouvette, President and Chief Executive Officer.
"We fully understand our responsibility to our shareholders and we
are very appreciative of their support for us." Total assets
declined by $13.7 million during the quarter due to the utilization
of cash and cash equivalents for planned reductions in borrowings
and the non-renewal of national market certificates of deposit.
Loans increased by $2.9 million and core transactional deposit
accounts increased by $20.1 million. Other highlights for the third
quarter include the successful completion of the Company's initial
public offering on September 22, 2006, the repayment of $9.5
million in debt incurred to acquire minority interests in 2005, and
an improvement in non-performing asset levels from June 30, 2006.
In its public offering, the Company issued 1,250,000 new shares at
a price of $24.00 per share. "Despite a flat yield curve, we
experienced only modest compression of our net interest margin
which remained strong at 3.95% and 4.00% for the quarter and year
to date, respectively," said Bouvette. Net interest income was
$9,279,000 for the three months ended September 30, 2006, an
increase of $38,000, or 0.4%, compared with $9,241,000 for the same
period in 2005. Net interest income was $27,733,000 for the nine
months ended September 30, 2006, an increase of $1,148,000, or
4.3%, compared with $26,585,000 for the same period in 2005. The
overall increase in net interest income was attributable to an
increase in overall loan volume offset by the reduction in net
interest margin reflecting the effect of a flattening yield curve.
Provision for loan losses decreased $439,000 to $276,000 for the
three months ended September 30, 2006 and $739,000 to $1,029,000
for the nine months ended September 30, 2006 compared to the same
periods ended September 30, 2005. In connection with our
reorganization and consolidation of our loan review processes
during 2005, we conducted a thorough review of our loan portfolio
resulting in an increased provision for loan losses. We assess the
adequacy of our loan loss reserve each quarter and make the
appropriate provision for loan losses based on that assessment.
Non-interest income for the third quarter of 2006 decreased
$45,000, or 3.3%, from the third quarter of 2005. Non-interest
income for the nine months ended September 30, 2006 decreased
$328,000, or 7.6%, in comparison to the same period last year. The
decrease for both the third quarter and the first nine months of
2006 was primarily due to decreased income from service charges on
deposit accounts and gains on sales of government guaranteed loans,
reflecting the cyclical nature of originations and sales of this
type of loan. Service charges on deposit accounts decreased as a
result of changes in product fee structures that the Company
believes will make certain products more competitive, thereby
increasing product sales over time. These decreases in non-interest
income were partially offset by increased income from gains on
sales of loans originated for sale through the Bank's mortgage
division, which we acquired in January 2006. Non-interest expense
for the quarter ended September 30, 2006 of $4.7 million
represented a 5.4% decrease from $4.9 million for the third quarter
of 2005. Non-interest expense for the nine months ended September
30, 2006 of $14.9 million represented a 1.1% increase from the
$14.8 million for the same period last year. The decrease in
non-interest expense for the quarter was primarily due to reduced
employee benefit costs resulting from a change in the Company's
group health benefit plan effective on July 1, 2006 and an increase
in deferred direct loan origination costs. This decrease was
partially offset by the increased advertising cost in connection
with branding our Bank's new name, PBI Bank. The primary factors
impacting non-interest expense for the nine month period were
additional employee compensation expenses relating to planned
growth in our lending staff; decreased group benefit plan costs;
and the increased advertising cost. In addition, the Company
implemented Statement of Financial Accounting Standards No. 123(r),
"Share-Based Payment" (SFAS No. 123(r)) during the first quarter of
2006 resulting in the recognition of $41,000 and $106,000 in
non-cash compensation expense in the third quarter and first nine
months of 2006, respectively. No such expense was recorded in the
comparative periods of 2005. Total assets for the third quarter
increased 3.5% to $999.7 million from $965.7 million at September
30, 2005. The Company's loan portfolio increased 2.7% to $817.4
million from $795.6 million at September 30, 2005 primarily due to
in-house loan origination efforts of our lending staff. Deposits at
September 30, 2006 increased by 1.7% to $802.4 million from $789.3
million at September 30, 2005 primarily due to an increase in both
time deposits and transactional accounts from promotional efforts
throughout the period. In conclusion, Bouvette added "Overall we
were very pleased with our performance during the third quarter.
Although we did experience uncharacteristic paydown activity in our
loan portfolio, which limited our net loan growth, we believe
paydown levels have normalized going into the fourth quarter. We
are optimistic we have regained our growth momentum as indicated by
our robust loan production pipeline. We continue to see market
expansion opportunities and we remain focused on our strategic
initiatives." PBIB-G Forward-Looking Statements Statements in this
press release relating to Porter Bancorp's plans, objectives,
expectations or future performance are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are based on management's
current expectations. Porter Bancorp's actual results in future
periods may differ materially from those currently expected due to
various risks and uncertainties, including those discussed in the
"Risk Factors" section of the Company's Form S-1 Registration
Statement (Reg. No. 333-133198) and subsequent periodic reports
filed with the Securities and Exchange Commission. The
forward-looking statements in this press release are made as of the
date of the release and Porter Bancorp does not assume any
responsibility to update these statements. Additional Information
Unaudited supplemental financial information for the third quarter
and nine months ending September 30, 2006 follows. -0- *T PORTER
BANCORP, INC. AND SUBSIDIARY Unaudited Financial Information (in
thousands, except share and per share data) Three Months Ended Nine
Months Ended September 30, September 30, 2006 2005 2006 2005
---------- ---------- ---------- ---------- Income Statement Data
Interest income $18,564 $15,903 $53,498 $44,917 Interest expense
9,285 6,662 25,765 18,332 ---------- ---------- ----------
---------- Net interest income 9,279 9,241 27,733 26,585 Provision
for loan losses 276 715 1,029 1,768 ---------- ----------
---------- ---------- Net interest income after provision for loan
losses 9,003 8,526 26,704 24,817 Non-interest income 1,317 1,362
4,013 4,341 Non-interest expense 4,653 4,919 14,940 14,771
---------- ---------- ---------- ---------- Income before minority
interest 5,667 4,969 15,777 14,387 Minority interest in net income
of consolidated subsidiaries - 318 - 996 ---------- ----------
---------- ---------- Income before income taxes 5,667 4,651 15,777
13,391 Income tax expense 1,858 947 5,135 2,827 ----------
---------- ---------- ---------- Net income $3,809 $3,704 $10,642
$10,564 ========== ========== ========== ========== Weighted
average shares (basis & diluted) 6,454,730 5,868,224 6,373,656
5,868,224 Basic and diluted earnings per share $0.59 $0.63 $1.67
$1.80 Cash dividends declared per share $0.20 $0.48 $0.60 $1.11 Pro
Forma Data(1) Net income: As reported $3,809 $3,704 $10,642 $10,564
Adjustments: Add back minority interests(2) - 318 - 996 Additional
taxes(3) - (743) - (2,065) Acquisition funding(4) - (147) - (440)
---------- ---------- ---------- ---------- Adjusted net income
$3,809 $3,132 $10,642 $9,055 ========== ========== ==========
========== Weighted Average Shares Outstanding As reported and as
adjusted for stock split 6,454,730 5,868,224 6,373,656 5,868,224
Shares issued in the Ascencia transaction - 464,223 - 464,223
---------- ---------- ---------- ---------- Adjusted shares
outstanding 6,454,730 6,332,447 6,373,656 6,332,447 ==========
========== ========== ========== Basic and diluted earnings per
share $0.59 $0.49 $1.67 $1.43 (1) The pro forma adjustments present
the Company's 2005 results as if its acquisition of minority
interests in subsidiary banks and the termination of its S
corporation status, which were effective on December 31, 2005, were
in effect for all of 2005. (2) This adjustment reflects the
minority interests in subsidiaries in a corporate reorganization on
December 31, 2005. (3) This adjustment represents a tax rate of 34%
applied to reported pre-tax income less reported tax expense to
reflect the conversion from Subchapter S corporation to C
corporation status effective December 31, 2005. (4) Acquisition
funding for the reorganization includes $9,500 in senior notes at
an annual 6% interest rate and $5,313 in cash at an assumed annual
6% interest rate, net of tax at a 34% tax rate. *T -0- *T PORTER
BANCORP, INC. AND SUBSIDIARY Unaudited Financial Information (in
thousands, except share and per share data) Sept. June March Dec.
Sept. 2006 2006 2006 2005 2005 ---------- ----------- ----------
---------- ---------- Balance Sheet Data (at period end) Total
assets $999,661 $1,013,372 $981,231 $991,481 $965,668 Total loans
817,421 814,489 807,736 791,951 795,643 Non-interest bearing
deposits 67,534 66,064 64,949 62,379 63,356 Interest bearing
deposits 734,884 746,126 745,015 744,200 725,935 Stockholders'
equity 105,806 75,537 73,968 71,876 69,497 Shares outstanding
7,620,497 6,371,697 6,372,047 6,332,447 5,868,224 Book value per
share 13.88 11.86 11.61 11.35 11.84 Tangible book value per share
12.15 9.95 9.60 9.32 10.93 *T -0- *T Three Months Ended Nine Months
Ended September 30, September 30, 2006 2005 2006 2005 --------
-------- -------- -------- Average Balance Sheet Data Average
assets $988,265 $955,716 $985,074 $932,519 Average assets - pro
forma(1) - 961,397 - 929,222 Average loans 811,838 779,418 807,104
766,842 Average earning assets 940,831 916,693 936,821 894,947
Average deposits 797,908 779,376 803,569 765,539 Average long-term
debt and advances 101,477 77,431 93,769 76,182 Average interest
bearing liabilities 837,381 803,623 836,859 786,125 Average
stockholders' equity 78,410 69,396 75,945 68,487 Average
stockholders' equity - pro forma(1) - 71,724 - 69,778 Performance
Ratios Return on average assets 1.53% 1.54% 1.44% 1.51% Return on
average assets - pro forma(1) - 1.30 - 1.30 Return on average
equity 19.27 21.18 18.74 20.62 Return on average equity - pro
forma(1) - 17.47 - 17.30 Net interest margin, fully tax equivalent
3.95 4.04 4.00 4.01 Efficiency ratio 43.91 46.39 47.06 47.76 Asset
Quality Data (at period end) Non-performing loans $ 9,972 $ 8,868
Allowance for loan losses to non- performing loans 126.91% 140.21%
Allowance for loan losses to portfolio loans 1.55 1.56
Non-performing loans to total portfolio loans 1.22 1.11 (1) As
adjusted on a pro forma basis to present the Company's 2005 results
as if its acquisition of minority interests in subsidiary banks and
the termination of its S corporation status, which became effective
on December 31, 2005, were in effect for all of 2005. *T
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