Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of
PBI Bank, with 18 full-service banking offices in 11 counties
in Kentucky, today reported results for the third quarter of
2009.
The Company reported net income of $4.5 million, or $0.49 per
fully diluted common share, for the third quarter of 2009, compared
with $4.1 million, or $0.50 per fully diluted common share, for the
third quarter of 2008. Earnings for the nine months ended September
30, 2009, were $10.8 million, or $1.13 per fully diluted common
share, compared with $11.7 million, or $1.41 per fully diluted
common share, for the same period of 2008.
“Porter Bancorp reported growth in net interest income and net
income in the third quarter of 2009 compared with the second
quarter of 2009,” stated Maria L. Bouvette, President and CEO of
Porter Bancorp. “We benefited from an increase in our net interest
margin, higher non-interest income and lower expenses compared with
the second quarter. Our increased profitability was also
highlighted by an improvement in our efficiency ratio to 47.14%,
our best result in eight quarters.
“We remained focused on our asset quality due to the soft
economy and strengthened our allowance for loan losses to 1.58% at
the end of the third quarter,” continued Ms. Bouvette. “We
continued building our reserves as part of our strategy to protect
our capital base. Porter Bancorp continues to maintain its
‘well-capitalized’ position, the highest regulatory rating. Our
total risk-based capital ratio of 13.8% for the holding company
remains significantly above the 10.0% requirement for a
well-capitalized institution.”
Third Quarter Results
- Earnings per common share
increased 48.5% to $0.49 in the third quarter of 2009 compared with
$0.33 in the second quarter of 2009. The growth in earnings
benefited from an increase in net interest income, and non-interest
income and a decrease in non-interest expense. Second quarter 2009
non-interest expense included a special FDIC assessment of
$781,000, equivalent to $0.06, net of tax, per diluted common
share, which was not repeated in the 2009 third quarter.
- Net interest margin increased 46
basis points to 3.59% in the third quarter of 2009 from 3.13% in
the second quarter of 2009.
- Net income was $4.5 million for
the three months ended September 30, 2009, compared with $4.1
million for the third quarter of 2008. Earnings per diluted common
share were $0.49 in the third quarter of 2009 compared with $0.50
per share in the third quarter of 2008. The 2009 earnings per
common share results included deductions of approximately $0.06 per
common share attributable to dividends and accretion on
$35 million in preferred stock issued to the United States
Treasury. There were no comparable preferred dividends in the third
quarter of 2008.
- Net interest income increased
15.6% to $14.4 million for the three months ended September 30,
2009, compared with the same quarter of 2008.
- Efficiency ratio improved to
47.14% for the three months ended September 30, 2009, compared with
55.94% for the second quarter of 2009.
- Loans grew 3.3% to $1.4 billion,
compared with $1.3 billion at September 30, 2008.
- Deposits increased 8.4% to $1.4
billion compared with $1.3 billion at September 30, 2008.
- Total assets increased 8.3% to
$1.7 billion since the third quarter of 2008, due to growth in
loans and the security portfolio.
- Nonperforming loans increased
$7.0 million, or 36.2%, to $26.3 million in the 2009 third quarter
compared with the second quarter of 2009. Non-performing assets
increased $10.4 million, or 35.8%, to $39.3 million compared with
the second quarter of 2009.
Net Interest Income
Net interest income increased 15.6% to $14.4 million for the
three months ended September 30, 2009, an increase of $1.9 million,
compared with $12.4 million for the same period in 2008. Net
interest income rose 9.5% to $39.2 million for the nine months
ended September 30, 2009, an increase of $3.4 million, compared
with $35.7 million for the same period in 2008. The increase
in net interest income was primarily attributable to an increase in
average earning assets and decreased cost of funds compared with
2008.
Net interest margin increased 46 basis points to 3.59% from
3.13% in the second quarter of 2009 due primarily to lower cost of
funds. The yield on earning assets increased 19 basis points from
the second quarter of 2009 and rates paid on interest-bearing
liabilities decreased 31 basis points. Net interest margin
increased 26 basis points to 3.59% in the third quarter of 2009
from our margin of 3.33% in the third quarter of 2008 due primarily
to lower cost of funds. The yield on earning assets declined 77
basis points from the 2008 third quarter, compared with a 105 basis
point decline in rates paid on interest-bearing liabilities.
Average earning assets rose 6.8% to $1.6 billion for the three
months ended September 30, 2009, compared with the $1.5 billion for
the three months ended September 30, 2008. Average deposits
increased 9.4% to $1.4 billion, up from $1.3 billion for the three
months ended September 30, 2008. “We expect continued expansion in
our margin next quarter since we are asset sensitive and our
expectation of continued downward liability repricing with limited
repricing of assets,” noted Ms. Bouvette.
Non-Interest Income
Non-interest income increased 18.0%, or $311,000, to $2.0
million for the third quarter of 2009, compared with the third
quarter of 2008. The increase in non-interest income was due to
gains on sales of securities and loans originated for sale, which
were partially offset by lower service charges on deposit accounts
and lower income from fiduciary activities. Our subsidiary, PBI
Bank, began originating residential real estate loans for sale in
the secondary market late in the first quarter of 2009. Loans sold
generated $82,000 in income in the third quarter of 2009 and
$323,000 for the first nine months of 2009. The Bank retained
servicing rights for the sold loans.
Non-Interest Expense
Non-interest expense for the third quarter increased 12.0% from
the prior year third quarter. This was due primarily to increased
FDIC insurance premiums. FDIC insurance premiums have risen
significantly due to amendments made by the FDIC in 2007 to its
risk-based deposit premium assessment system. FDIC premiums more
than doubled to $626,000 in the third quarter of 2009 from $284,000
in the third quarter of 2008. Our efficiency ratio continues to
outperform our peers at 47.14% for the third quarter of 2009 and
improved from 47.47% in the third quarter of 2008.
Balance Sheet Review
Total assets increased 8.3%, or $132.6 million, to $1.7 billion
at September 30, 2009, from $1.6 billion at September 30, 2008. The
Company’s loan portfolio increased 3.3%, or $44.9 million, to $1.39
billion from $1.34 billion at September 30, 2008, primarily due to
in-house loan origination efforts. Deposits at September 30, 2009,
increased 8.4% to $1.4 billion from $1.3 billion at September 30,
2008, primarily due to an increase in both time deposits and
transactional accounts from promotional efforts throughout the
period.
Asset Quality
Non-performing loans increased to $26.3 million, or 1.89% of
total loans, at September 30, 2009, compared with $19.3 million, or
1.42% of total loans, at June 30, 2009, and increased in comparison
with $15.4 million, or 1.15% of total loans, at September 30, 2008.
Foreclosed properties at September 30, 2009, were $12.9 million,
compared with $9.6 million at June 30, 2009, and $7.5 million at
September 30, 2008. Our ratio of non-performing assets to total
assets increased during the quarter to 2.27% at September 30, 2009,
compared with 1.69% at June 30, 2009.
Our loan loss reserve as a percentage of total loans increased
to 1.58% at September 30, 2009, compared with 1.39% at September
30, 2008. Net loan charge-offs for the third quarter of 2009 were
$782,000, or 0.06% of average loans for the quarter.
“The majority of the increase in non-performing loans is
attributable to residential real estate construction and
development loans that have been affected by the weak economy,”
stated Ms. Bouvette. “We have increased our reserves to account for
these loans and remain very proactive in working through problem
loans to minimize future losses. We believe that our strengthened
allowance for loan losses and strong capital base will be important
buffers against possible continued weakness in the economy,”
concluded Ms. Bouvette.
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 third
quarter ending September 30, 2009 follows.
PORTER BANCORP, INC. AND
SUBSIDIARY
Unaudited Financial
Information
(in thousands, except share and
per share data)
Three Three Three Nine Nine Months
Months Months Months Months Ended Ended Ended Ended Ended 9/30/09
6/30/09 9/30/08 9/30/09 9/30/08
Income Statement Data Interest income $ 23,802 $ 23,645 $
25,106 $ 70,949 $ 75,821 Interest expense 9,428 10,832 12,673
31,795 40,073
Net interest income 14,374 12,813 12,433 39,154 35,748 Provision
for loan losses 2,000 1,600 1,250 5,200 2,650
Net interest income after provision 12,374 11,213 11,183 33,954
33,098 Service charges on deposit accounts 843 788 876 2,319
2,607 Income from fiduciary activities 227 198 261 645 845 Gains on
sales of loans originated for sale 82 241 - 323 - Gains (losses) on
sales of securities, net 321 - (101 ) 322 (146) Other 563 668 689
1,808 2,025
Non-interest income 2,036 1,895 1,725 5,417 5,331 Salaries
& employee benefits 3,799 3,813 3,666 11,490 11,382 Occupancy
and equipment 993 981 882 2,972 2,699 FDIC insurance 626 503 284
1,588 747 FDIC special insurance assessment - 781 - 781 - Franchise
tax 450 450 435 1,350 1,305 Other real estate owned expense 353 226
109 706 456 Professional fees 175 203 177 606 595 Communications
expense 183 230 181 568 530 Postage and delivery 193 184 201 561
568 Advertising 121 125 100 404 401 Other 691 732 734 2,062 2,250
Non-interest expense 7,584 8,228 6,769 23,088 20,933 Income
before income taxes 6,826 4,880 6,139 16,283 17,496 Income tax
expense 2,290 1,635 2,039 5,441 5,826
Net income 4,536 3,245 4,100 10,842 11,670 Less: Dividends on
preferred stock 437 437 - 1,312 - Accretion on preferred stock 44
44 - 132 - Net income available to common $
4,055 $ 2,764 $ 4,100 $ 9,398 $ 11,670
Weighted average common shares - Basic 8,339,323 8,338,008
8,288,200 8,324,109 8,282,214 Weighted average common shares –
Diluted 8,339,323 8,338,008 8,288,200 8,324,109 8,282,214
Basic and diluted earnings per common share $ 0.49 $ 0.33 $
0.50 $ 1.13 $ 1.41 Cash dividends declared per common share $ 0.21
$ 0.21 $ 0.20 $ 0.63 $ 0.60
PORTER BANCORP, INC. AND
SUBSIDIARY
Unaudited Financial
Information
(in thousands, except share and
per share data)
Three Three Three Nine Nine Months Months Months Months
Months Ended Ended Ended Ended Ended 9/30/09 6/30/09 9/30/08
9/30/09 9/30/08
Average Balance Sheet Data Assets $ 1,674,703 $ 1,734,866 $
1,582,701 $ 1,701,967 $ 1,553,301 Loans 1,368,970 1,360,191
1,351,897 1,363,150 1,316,367 Earning assets 1,599,943 1,659,389
1,498,361 1,626,887 1,469,511 Deposits 1,373,626 1,391,868
1,255,778 1,367,224 1,239,755 Long-term debt and advances 112,425
157,388 178,442 148,393 165,204 Interest bearing liabilities
1,401,791 1,456,778 1,353,983 1,426,975 1,325,525 Stockholders’
equity 168,561 167,168 128,080 167,172 126,112
Performance Ratios Return on average assets 1.07 % 0.75 %
1.03 % 0.85 % 1.00 % Return on average equity 10.68 7.79 12.73 8.67
12.36 Yield on average earning assets (tax equivalent) 5.93 5.74
6.70 5.86 6.92 Cost of interest bearing liabilities 2.67 2.98 3.72
2.98 4.04 Net interest margin (tax equivalent) 3.59 3.13 3.33 3.25
3.28 Efficiency ratio 47.14 55.94 47.47 52.18 50.78
Loan
Charge-off Data Loans charged-off $ (829 ) $ (1,300 ) $ (782 )
$ (3,112 ) $ (1,999 ) Recoveries 47 69 37 218 225
Net charge-offs $ (782 ) $ (1,231 ) $ (745 ) $ (2,894 ) $ (1,774 )
PORTER BANCORP, INC. AND
SUBSIDIARY
Unaudited Financial
Information
(in thousands, except share and
per share data)
As of As of As of As of 9/30/09 6/30/09 12/31/08 9/30/08
Assets Loans $ 1,387,359 $ 1,362,059 $ 1,350,106 $ 1,342,467
Loan loss reserve (21,958 ) (20,740 ) (19,652 ) (18,638 )
Net loans 1,365,401 1,341,319 1,330,454 1,323,829 Securities
available for sale 175,160 178,161 173,077 109,799 Federal funds
sold & interest bearing deposits 74,232 79,284 38,189 30,172
Cash and due from financial institutions 17,610 17,844 14,957
41,943 Premises and equipment 23,756 23,412 22,543 22,986 Goodwill
23,794 23,794 23,794 23,891 Accrued interest receivable and other
assets 48,809 45,994 44,843 43,572
Total Assets $ 1,728,762 $ 1,709,808 $ 1,647,857 $ 1,596,192
Liabilities and Equity Certificates of deposit $
1,099,402 $ 1,074,819 $ 1,012,851 $ 987,464 Interest checking
72,472 71,864 76,962 80,009 Money market 80,471 90,962 72,543
82,179 Savings 33,450 34,917 33,253 34,684
Total interest bearing deposits 1,285,795 1,272,562 1,195,609
1,184,336 Demand deposits 92,861 91,630 92,940 87,603
Total deposits 1,378,656 1,364,192 1,288,549 1,271,939 Federal
funds purchased & repurchase agreements 11,296 11,232 10,084
10,457 FHLB advances 125,284 126,350 142,776 143,842 Junior
subordinated debentures 34,000 34,000 34,000 34,000 Accrued
interest payable and other liabilities 8,411 7,891 8,235
8,194
Total liabilities 1,557,647 1,543,665 1,483,644 1,468,432
Stockholders’ equity 171,115 166,143 164,213 127,760
Total Liabilities and Stockholders’ Equity $ 1,728,762 $
1,709,808 $ 1,647,857 $ 1,596,192
Ending common shares outstanding 8,339,102 8,339,617
8,287,933 8,287,794
Book value per common share $ 16.32 $
15.73 $ 15.59 $ 15.42
Tangible book value per common share
12.82 12.52 12.33 12.25
Asset Quality Data Loan 90
days or more past due still on accrual $ 9,896 $ 8,405 $ 11,598 $
4,997 Non-accrual loans 16,369 10,872 9,725 10,420
Total non-performing loans 26,265 19,277 21,323 15,417 Real estate
acquired through foreclosures 12,934 9,551 7,839 7,521 Other
repossessed assets 77 80 96 96
Total non-performing assets $ 39,276 $ 28,908 $ 29,258 $ 23,034
Non-performing loans to total loans 1.89 % 1.42 % 1.58 % 1.15 %
Non-performing assets to total assets 2.27 1.69 1.78 1.44 Allowance
for loan losses to non-performing loans 83.60 107.59 92.16 120.89
Allowance for loan losses to total loans 1.58 1.52 1.46 1.39
Risk-based Capital Ratios Tier I leverage ratio 10.13 % 9.62
% 10.10 % 8.11 % Tier I risk-based capital ratio 11.90 11.98 12.13
9.55 Total risk-based capital ratio 13.80 13.89 14.05 11.49
FTE employees 281 278 276 283
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