Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI�Bank,
with 19 full-service banking offices in 12 counties in Kentucky,
today reported results for the first quarter of 2008. The Company
reported net income of $3.6 million, or $0.46 per share, for the
first quarter of 2008, compared with $3.6 million, or $0.47 per
share, for the first quarter of 2007. �Porter reported strong
growth in loans, deposits and assets in the first quarter of 2008
and benefited from the continued expansion of existing markets and
the contribution from acquisitions completed over the past year,�
stated Maria L. Bouvette, President and CEO of Porter Bancorp, Inc.
�Asset quality remained solid in the first quarter, highlighting
the overall strength of our markets and our increased attention on
managing credit risks. Our first quarter provision for loan losses
rose only 4% from the prior year�s first quarter while our coverage
ratio of allowance for loan losses to non-performing loans
increased to 179% from 160% in the first quarter of 2007. Our net
income was slightly below first quarter 2007 primarily due to the
impact of the recent declines in interest rates on our margin and
higher expenses as we expanded our operations. We are well
positioned to improve earnings as interest rates stabilize and we
streamline our operational efficiency,� continued Ms. Bouvette.
Highlights Net interest income increased 16.4% to $11.3 million for
the three months ended March 31, 2008, compared with the same
quarter of 2007. Loans grew 41.8% to $1.3 billion compared with
$927 million at March 31, 2007. Deposits increased 37.8% to $1.2
billion compared with $897 million at March 31, 2007. Core customer
non-interest bearing deposit accounts increased 36.0% to $95.2
million from $70 million at March 31, 2007. Total assets increased
39.7% to $1.6 billion since the first quarter of 2007, fueled by
strong loan growth and the acquisitions of Kentucky Trust Bank and
Paramount Bank. We completed the acquisition of Paramount Bank in
Lexington, Kentucky in a $5 million all cash transaction on
February 1, 2008. The acquisition added approximately $75 million
in assets and $75 million in deposits, of which approximately $15
million are core demand deposits. This acquisition established our
physical presence in Lexington, Fayette County, the second largest
market in Kentucky. We repurchased 17,371 common shares of our
common stock at an aggregate price of $300,518 under our $3�million
stock repurchase plan in the first quarter 2008. The Company has
approximately $2.5 million remaining under the original $3 million
authorized by the Board of Directors to purchase additional shares
of common stock. �We are pleased with our solid financial
performance in the first quarter,� continued Ms. Bouvette. �We
benefited from organic growth in our existing markets and the
synergy of the new markets that we entered since last year. Our
challenge for 2008 will be to manage our credit risks in light of
the soft economy and to improve our margin on earning assets. We
continue to believe Porter Bancorp is in a solid position to
weather this soft economy and we remain committed to our mission of
strategically expanding our franchise throughout our target market
area.� Net Interest Income Net interest income increased 16.4% to
$11.3 million for the three months ended March 31, 2008, an
increase of $1.6�million, compared with $9.7 million for the same
period in 2007. This increase was attributable to the growth in our
loan portfolio and the Kentucky Trust Bank and Paramount Bank
acquisitions. Net interest margin for the first quarter of 2008
declined to 3.21% compared with 3.92% for the first quarter of
2007. Net interest margin decreased 33 basis points from our margin
of 3.54% in the fourth quarter of 2007. Our spread and margin were
adversely impacted during the quarter as the Federal Reserve
decreased rates by 200 basis points on top of the effects of a 50
basis points decline during the fourth quarter of 2007. Our balance
sheet is asset-sensitive, so our loan yields have responded more
rapidly to the Federal Reserve rate cuts than our cost of funds. If
the interest rate environment stabilizes, we believe that our
funding costs will decrease in the near term as our deposits
reprice to match the decline in loan yields. However, future rate
cuts would continue to put pressure on our margin since our loans
reprice more quickly than our deposits. Non-Interest Income
Non-interest income for the first quarter of 2008 increased 55.4%,
or $648,000, over the first quarter of 2007, and 2.9%, or $52,000,
over the fourth quarter of 2007. The growth in non-interest income
over the first quarter of 2007 was primarily attributable to higher
service charges on deposit accounts and income from fiduciary
activities. Porter added income from fiduciary activities as a
result of the acquisition of the trust operation from Kentucky
Trust Bank. Income from fiduciary activities added $253,000 to
non-interest income in the first quarter of 2008. Non-Interest
Expense Non-interest expense for the first quarter increased 43.8%
from prior year first quarter. This was due primarily to costs
related to the acquisitions of Kentucky Trust Bank and Paramount
Bank, increased salaries and benefits for existing employees, and
occupancy and equipment expense to support the six additional
offices. Expenses also increased because FDIC insurance premiums
rose significantly due to amendments made by the FDIC in 2007 to
its risk-based deposit premium assessment system. Our efficiency
ratio continues to outperform our peers at 54.5% for 2008 compared
with 45.4% in 2007. Balance Sheet Review Total assets increased
39.7%, or $445 million, to $1.6 billion at March 31, 2008, from
$1.1 billion at March�31, 2007. The Company�s loan portfolio
increased 41.8%, or $387 million, to $1.3 billion from $927�million
at March 31, 2007, primarily due to in-house loan origination
efforts and the acquisitions of Kentucky Trust Bank and Paramount
Bank. Deposits at March 31, 2008 increased 37.8% to $1.2 billion
from $897 million at March 31, 2007, primarily due to an increase
in both time deposits and transactional accounts from promotional
efforts throughout the period, and the Kentucky Trust Bank and
Paramount Bank acquisitions. Asset Quality �Our asset quality
remains stable in this difficult operating environment,� continued
Ms. Bouvette. �Our ratio of non-performing loans to total loans
declined to 0.77% at March 31, 2008, compared with 0.89% for the
same date in 2007. Additionally, our ratio of non-performing assets
to total assets improved during the quarter to 1.10% at March�31,
2008, compared with 1.17% at December 31, 2007. We believe that
this improvement is indicative of our continuing ability to manage
our risks during this difficult credit cycle.� Nonperforming loans
at March 31, 2008, were $10.1 million, or 0.77% of total loans,
compared with $12.7 million, or 1.04% of total loans at December
31, 2007, and $8.3 million, or 0.89% of total loans at March 31,
2007. The $2.6�million decrease in nonperforming loans since
year-end reflects the normal progression of troubled loans through
workout, collateral repossession and ultimate disposition.
Foreclosed properties at March 31, 2008, were $7.1 million compared
with $2.7 million at March 31, 2007, and $4.3 million at December
31, 2007. Our loan loss reserve as a percentage of total loans at
March 31, 2008, increased slightly to 1.37% from 1.34% at December
31, 2007, and decreased from 1.43% at March 31, 2007. Net loan
charge-offs for the first quarter of 2008 were $345,000, or 0.02%
of average loans for the quarter. We assess the adequacy of our
loan loss reserve each quarter and make the appropriate provision
for loan losses based on that assessment. PBIB-G PBIB-F
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 under �Risk
Factors� in the Company�s Form 10-K 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 first quarter
ending March 31, 2008 follows. PORTER BANCORP, INC. AND SUBSIDIARY
Unaudited Financial Information (in thousands, except share and per
share data) � � Three Three Three Months Months Months Ended Ended
Ended 3/31/08 12/31/07 3/31/07 � � � Income Statement Data Interest
income $ 25,674 $ 25,960 $ 20,054 Interest expense � 14,331 �
14,164 � 10,310 � � � Net interest income 11,343 11,796 9,744
Provision for loan losses � 650 � 1,200 � 625 � � � Net interest
income after provision 10,693 10,596 9,119 � Service charges on
deposit accounts 829 908 535 Income from fiduciary activities 253
206 - Gains on sales of securities, net 94 3 - Other � 642 � 649 �
635 � � � Non-interest income 1,818 1,766 1,170 � Salaries &
employee benefits 3,824 3,419 2,935 Occupancy and equipment 913 890
565 Franchise tax 435 360 325 Professional fees 246 344 152 FDIC
insurance 221 170 25 Communications expense 161 144 110 Advertising
161 151 139 Other real estate owned expense 227 506 42 Other � 929
� 894 � 657 � � � Non-interest expense 7,117 6,878 4,950 � Income
before income taxes 5,394 5,484 5,339 Income tax expense � 1,797 �
1,844 � 1,738 � � � Net income $ 3,597 $ 3,640 $ 3,601 � � � �
Weighted average shares - Basic 7,839,365 7,848,215 7,582,819
Weighted average shares - Diluted 7,839,365 7,848,215 7,582,819 �
Basic and diluted earnings per share $ 0.46 $ 0.46 $ 0.47 Cash
dividends declared per share $ 0.21 $ 0.21 $ 0.20 PORTER BANCORP,
INC. AND SUBSIDIARY Unaudited Financial Information (in thousands,
except share and per share data) � � � Three Three Three Months
Months Months Ended Ended Ended 3/31/08 12/31/07 3/31/07 � � �
Average Balance Sheet Data Assets $ 1,513,245 $ 1,406,800 $
1,066,894 Loans 1,269,818 1,188,194 891,591 Earning assets
1,434,044 1,331,043 1,016,964 Deposits 1,221,159 1,142,606 875,568
Long-term debt and advances 146,605 110,124 72,853 Interest bearing
liabilities 1,288,152 1,188,512 881,771 Stockholders� equity
124,023 122,809 110,235 � � Performance Ratios Return on average
assets 0.96 % 1.03 % 1.37 % Return on average equity 11.66 11.76
13.25 Yield on average earning assets (tax equivalent) 7.20 7.77
8.03 Cost of interest bearing liabilities 4.47 4.73 4.74 Net
interest margin (tax equivalent) 3.21 3.54 3.92 Efficiency ratio
54.47 50.73 45.35 � Loan Charge-off Data Loans charged-off $ (419 )
$ (1,029 ) $ (314 ) Recoveries � 74 � 46 � 68 � � � Net charge-offs
$ (345 ) $ (983 ) $ (246 ) PORTER BANCORP, INC. AND SUBSIDIARY
Unaudited Financial Information (in thousands, except share and per
share data) � � � As of As of As of � 3/31/08 12/31/07 3/31/07 � �
� Assets Loans $ 1,314,075 $ 1,217,698 $ 926,747 Loan loss reserve
� (18,067 ) � (16,342 ) � (13,211 ) � � � � Net loans 1,296,008
1,201,356 913,536 Securities available for sale 123,560 128,036
97,463 Federal funds sold & interest bearing deposits 1,285
19,979 6,042 Cash and due from financial institutions 55,376 23,608
44,553 Premises and equipment 22,413 21,279 13,808 Goodwill 23,504
18,174 12,881 Accrued interest receivable and other assets � 42,592
� 43,588 � 31,462 � � � � Total Assets $ 1,564,738 $ 1,456,020 $
1,119,745 � � � � � Liabilities and Equity Certificates of deposit
$ 916,560 $ 846,568 $ 673,017 Interest checking 97,834 95,953
49,600 Money market 91,825 99,839 79,823 Savings � 35,469 � 28,661
� 25,041 � � � � Total interest bearing deposits 1,141,688
1,071,021 827,481 Demand deposits � 95,163 � 95,533 � 69,998 � � �
� Total deposits 1,236,851 1,166,554 897,479 Federal funds
purchased & repurchase agreements 24,706 11,285 1,473 FHLB
advances 146,021 121,767 77,007 Junior subordinated debentures
25,000 25,000 25,000 Accrued interest payable and other liabilities
� 7,415 � 9,125 � 8,227 � � � � Total liabilities 1,439,993
1,333,731 1,009,186 Stockholders� equity � 124,745 � 122,289 �
110,559 � � � � Total Liabilities and Stockholders� Equity $
1,564,738 $ 1,456,020 $ 1,119,745 � � � � � Ending shares
outstanding 7,863,745 7,881,206 7,621,647 Book value per share $
15.86 $ 15.52 $ 14.51 Tangible book value per share 12.26 12.80
12.73 � Asset Quality Data Loan 90 days or more past due still on
accrual $ 3,301 $ 2,145 $ 769 Non-accrual loans � 6,808 � 10,524 �
7,493 � � � � Total non-performing loans 10,109 12,669 8,262 Real
estate acquired through foreclosures 7,140 4,309 2,702 Other
repossessed assets � 32 � 30 � 9 � � � � Total non-performing
assets $ 17,281 $ 17,008 $ 10,973 � � � � Non-performing loans to
total loans 0.77 % 1.04 % 0.89 % Non-performing assets to total
loans 1.32 1.40 1.18 Non-performing assets to total assets 1.10
1.17 0.98 Allowance for loan losses to non-performing loans 178.72
128.99 159.90 Allowance for loan losses to total loans 1.37 1.34
1.43 � Risk-based Capital Ratios Tier I leverage ratio 8.14 % 9.07
% 11.58 % Tier I risk-based capital ratio 9.35 10.39 13.42 Total
risk-based capital ratio 10.60 11.64 14.67 � FTE employees 290 273
221
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