Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of
PBI Bank, with 18 full-service banking offices in Kentucky,
today reported results for the fourth quarter and year ended
December 31, 2009. The Company reported net income of $226,000 for
the fourth quarter of 2009 and $11.1 million for the year ended
December 31, 2009. Including the preferred stock dividend and
related accretion, the net loss to common shareholders was
$256,000, or ($0.03) per fully diluted common share, for the fourth
quarter of 2009 and net income of $9.1 million available to common
shareholders, or $1.05 per fully diluted common share, for the full
year. Porter Bancorp also reported a 4.7% increase in loans to $1.4
billion and a 18.7% increase in deposits to $1.5 billion compared
with year-end 2008.
“Porter Bancorp reported higher net interest income in the
fourth quarter of 2009 due to continued growth in earning assets,”
stated Maria L. Bouvette, President and CEO of Porter Bancorp. “The
growth in our net interest income was more than offset by a
substantial increase in our provision for loan losses in the fourth
quarter to account for higher charge-offs and building our
allowance for loan losses. We took a more aggressive stance in
reviewing our loan portfolio at year-end in light of the heightened
regulatory scrutiny in the current environment and the prolonged
weakness in the economy coupled with our concentration of real
estate loans and the economy’s impact on real estate values.
“Our higher provision expense in the fourth quarter was the
major factor in Porter reporting lower earnings in 2009 compared
with 2008,” continued Ms. Bouvette. “Our core operations remain
solid as evidenced by our growth in net interest income and
non-interest income since the fourth quarter of last year. In
addition, we continued to leverage our infrastructure as evidenced
by the decrease in our non-interest expenses since the third
quarter and improvement in our efficiency ratio. Our fourth quarter
efficiency ratio of 44.43% was our best performance in nine
quarters and remains one of the best in our industry.
“We remained focused on our asset quality due to the continuing
soft economy and strengthened our allowance for loan losses to
1.87% at the end of the fourth quarter. Porter Bancorp continues to
maintain its ‘well-capitalized’ position, the highest regulatory
rating. Our total risk-based capital ratio of 13.83% for the
holding company remains significantly above the 10.0% requirement
for a well-capitalized institution.”
Fourth Quarter Results
- Net interest income increased
29.8% to $14.9 million for the three months ended
December 31, 2009, compared with the same quarter of
2008. The growth in net interest income benefited from a 7.2%
increase in earning assets to $1.7 billion and growth in net
interest margin to 3.57% compared with 2.96% for the fourth quarter
of 2008.
- Net interest margin increased 61
basis points to 3.57% in the fourth quarter of 2009 compared with
2.96% in the fourth quarter of 2008. Net interest margin was down 2
basis points from 3.59% in the third quarter of 2009 due to
approximately $580,000 in interest reversals related to loans moved
to non-performing status in the latest three months.
- Net income was $226,000 for the
three months ended December 31, 2009, compared with $2.3 million
for the fourth quarter of 2008. Net income was reduced by a $6.3
million increase in the provision for losses in the fourth quarter
of 2009 compared with the same period in 2008.
- Net loss available to common
stockholders was $256,000 for the fourth quarter of 2009, compared
with net income of $2.1 million for the fourth quarter of 2008. The
results included preferred stock dividend and accretion costs of
$482,000 for the 2009 period and $214,000 in the 2008 period. Loss
per diluted common share was ($0.03) in the fourth quarter of 2009
compared with earnings of $0.24 per share in the fourth quarter of
2008.
- Efficiency ratio improved to
44.43% for the three months ended December 31, 2009, compared with
47.14% for the third quarter of 2009.
- Loans grew 4.7% to $1.41
billion, compared with $1.35 billion at December 31, 2008.
- Deposits increased 18.7% to $1.5
billion compared with $1.3 billion at December 31, 2008.
- Total assets increased 11.4% to
$1.8 billion compared with $1.6 billion at December 31, 2008.
- Nonperforming loans increased
$58.6 million to $84.9 million in the 2009 fourth quarter compared
with $26.3 million in the third quarter of 2009. Non-performing
assets increased $60.2 million to $99.5 million compared with the
third quarter of 2009.
Net Interest Income
Net interest income increased 29.8% to $14.9 million for the
three months ended December 31, 2009, an increase of $3.4 million,
compared with $11.5 million for the same period in 2008. Net
interest income rose 14.5% to $54.1 million for the year ended
December 31, 2009, an increase of $6.8 million, compared with $47.2
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 61 basis points to 3.57% from
2.96% in the fourth quarter of 2008. The yield on earning assets
declined 62 basis points from the 2008 fourth quarter and the rates
paid on interest-bearing liabilities declined by 136 basis points
from the fourth quarter of 2008. Net interest margin declined 2
basis points from the linked third quarter of 2009 due primarily to
lower yield on earning assets, but was partially offset by lower
cost of funds. The yield on earning assets decreased 31 basis
points from the third quarter of 2009 and rates paid on
interest-bearing liabilities decreased 34 basis points. The
decline in yield on earning assets compared with the third quarter
of 2009 was due to approximately $580,000 in interest reversals
arising from loans moving to non-performing status during the
fourth quarter.
Average earning assets rose 7.2% to $1.7 billion for the three
months ended December 31, 2009, compared with $1.6 billion for
the three months ended December 31, 2008. Average deposits
increased 12.2% to $1.4 billion, up from $1.3 billion for the
three months ended December 31, 2008.
Non-Interest Income
Non-interest income increased 9.1%, or $140,000, to $1.7 million
for the fourth quarter of 2009, compared with the fourth quarter of
2008. The increase in non-interest income was due to gains on sales
of loans originated for sale, but was partially offset by lower
service charges on deposit accounts. PBI Bank began originating
residential real estate loans for sale in the secondary market late
in the first quarter of 2009. Loans sold generated $88,000 in
income in the fourth quarter of 2009 and $411,000 for the year
ended December 31, 2009. The Bank retained servicing rights for the
sold loans. Fourth quarter 2008 non-interest income included a
one-time gain of $410,000 on the sale of a branch and a one-time
other-than-temporary impairment charge of $471,000 related to
equity securities in the securities portfolio.
Non-Interest Expense
Non-interest expense for the fourth quarter increased 8.0% from
the prior year fourth quarter. This was due primarily to increased
FDIC insurance premiums. FDIC insurance premiums were $615,000 in
the fourth quarter of 2009 compared with $304,000 in the fourth
quarter of 2008.
Non-interest expense was down in every major category compared
with the third quarter of 2009 except for other real estate owned
expense and professional fees. Professional fees increased
primarily due to costs associated with Porter’s abandoned tender
offer to acquire Citizens First Corporation of Bowling Green,
Kentucky, that was terminated in December 2009. Our efficiency
ratio continues to outperform our peers at 44.43% for the fourth
quarter of 2009 and improved from 50.64% in the fourth quarter of
2008.
Balance Sheet Review
Total assets increased 11.4%, or $187.2 million, to $1.8 billion
at December 31, 2009, from $1.6 billion at December 31, 2008.
The Company’s loan portfolio increased 4.7%, or $63 million, to
$1.41 billion from $1.35 billion at December 31, 2008, due to
in-house loan origination efforts. Deposits at December 31, 2009,
increased 18.7% to $1.5 billion from $1.3 billion at December 31,
2008, primarily due to an increase in both time deposits and
transactional accounts from promotional efforts throughout the
year.
Asset Quality
Non-performing loans increased to $84.9 million, or 6.00% of
total loans, at December 31, 2009, compared with $26.3 million, or
1.89% of total loans, at September 30, 2009, and $21.3 million, or
1.58% of total loans, at December 31, 2008. Foreclosed properties
at December 31, 2009, were $14.5 million, compared with $12.9
million at September 30, 2009, and $7.8 million at December 31,
2008. Our ratio of non-performing assets to total assets increased
during the quarter to 5.42% at December 31, 2009, compared with
2.27% at September 30, 2009.
Our loan loss reserve as a percentage of total loans increased
to 1.87% at December 31, 2009, compared with 1.46% at December 31,
2008. Net loan charge-offs for the fourth quarter of 2009 were $4.6
million, or 0.33% of average loans for the quarter, and $7.5
million, or 0.54% of average loans for the year ended December 31,
2009.
“The prolonged weakness in the economy has resulted in continued
pressure on real estate values, reduced demand for real estate and
lower business profits that provide a source of security for many
loans,” stated Ms. Bouvette. “These factors were an important part
in our thorough review of our loan portfolio and the subsequent
downgrading of credits in the latest quarter, including an increase
of $58.6 million in loans to non-performing status. We also made a
significant addition to our reserve for loan losses as a result of
our allowance methodology that is driven by risk ratings. We
believe these measures align our loan portfolio with current
economic factors and greater industry regulatory scrutiny while
recognizing the potential risk of loss in our loan portfolio. We
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 fourth
quarter and year ending December 31, 2009, follows.
PORTER BANCORP, INC. AND SUBSIDIARY Unaudited Financial
Information
(in thousands, except share and
per share data)
Three Three Three Twelve Twelve
Months Months Months Months Months Ended Ended Ended Ended Ended
12/31/09 9/30/09 12/31/08 12/31/09 12/31/08
Income Statement
Data Interest income $ 23,517 $ 23,802 $ 24,286 $ 94,466 $
100,107 Interest expense 8,617 9,428 12,808 40,412 52,881
Net interest income 14,900 14,374 11,478 54,054 47,226 Provision
for loan losses 9,000 2,000 2,750 14,200 5,400 Net
interest income after provision 5,900 12,374 8,728 39,854 41,826
Service charges on deposit accounts 793 843 817 3,112 3,424
Income from fiduciary activities 230 227 234 875 1,079 Gains on
sales of loans originated for sale 88 82 - 411 - Gains (losses) on
sales of securities, net (7 ) 321 10 315 (136 ) Write-off of other
than temporary impairment - - (471 ) - (471 ) Gain on sale of
branch - - 410 - 410 Other 573 563 537 2,381 2,562
Non-interest income 1,677 2,036 1,537 7,094 6,868 Salaries
& employee benefits 3,519 3,799 3,410 15,009 14,792 Occupancy
and equipment 946 993 888 3,918 3,587 FDIC insurance 615 626 304
2,203 1,051 FDIC special insurance assessment - - - 781 - Franchise
tax 450 450 435 1,800 1,740 Other real estate owned expense 449 353
425 1,155 881 Professional fees 295 175 192 901 787 Postage and
delivery 191 193 180 752 748 Communications expense 161 183 181 729
711 Advertising 88 121 62 492 463 Other 654 691 747 2,716 2,997
Non-interest expense 7,368 7,584 6,824 30,456 27,757
Income before income taxes 209 6,826 3,441 16,492 20,937 Income tax
expense (17 ) 2,290 1,101 5,424 6,927 Net income 226 4,536
2,340 11,068 14,010 Less: Dividends on preferred stock 438 437 194
1,750 194 Accretion on preferred stock 44 44 20 176
20 Net income (loss) available to common $ (256 ) $ 4,055 $
2,126 $ 9,142 $ 13,796 Weighted average common shares
- Basic & Diluted 8,756,440 8,756,289 8,702,161 8,745,226
8,697,792 Basic and diluted earnings per common share
$ ( 0.03 ) $ 0.46 $ 0.24 $ 1.05 $ 1.59 Cash dividends declared per
common share $ 0.20 $ 0.20 $ 0.20 $ 0.80 $ 0.77
PORTER BANCORP,
INC. AND SUBSIDIARY Unaudited Financial Information
(in thousands, except share and
per share data)
Three Three Three Twelve Twelve
Months Months Months Months Months Ended Ended Ended Ended Ended
12/31/09 9/30/09 12/31/08 12/31/09 12/31/08
Average Balance
Sheet Data Assets $ 1,750,225 $ 1,674,703 $ 1,630,074 $
1,714,131 $ 1,572,599 Loans 1,394,429 1,368,970 1,349,351 1,371,034
1,324,658 Earning assets 1,667,417 1,599,943 1,555,621 1,637,103
1,491,156 Deposits 1,440,017 1,373,626 1,282,955 1,385,572
1,250,614 Long-term debt and advances 116,122 112,425 178,231
140,259 168,479 Interest bearing liabilities 1,469,548 1,401,791
1,382,241 1,437,706 1,339,782 Stockholders’ equity 173,440 168,561
148,366 168,752 131,706
Performance Ratios
Return on average assets 0.05 % 1.07 % 0.57 % 0.65 % 0.89 % Return
on average equity 0.52 10.68 6.27 6.56 10.64 Yield on average
earning assets (tax equivalent) 5.62 5.93 6.24 5.80 6.74 Cost of
interest bearing liabilities 2.33 2.67 3.69 2.81 3.95 Net interest
margin (tax equivalent) 3.57 3.59 2.96 3.33 3.20 Efficiency ratio
44.43 47.14 50.64 50.06 50.74
Loan Charge-off Data
Loans charged-off $ (4,619 ) $ (829 ) $ (1,835 ) $ (7,731 ) $
(3,834 ) Recoveries 53 47 98 271 323 Net charge-offs $ (4,566 ) $
(782 ) $ (1,737 ) $ (7,460 ) $ (3,511 )
PORTER BANCORP, INC. AND
SUBSIDIARY Unaudited Financial Information
(in thousands, except share and
per share data)
As of As of As of 12/31/09 9/30/09 12/31/08
Assets Loans $ 1,413,252 $ 1,387,359 $ 1,350,106 Loan loss
reserve (26,392 ) (21,958 ) (19,652 ) Net loans 1,386,860
1,365,401 1,330,454 Securities available for sale 168,721 175,160
173,077 Federal funds sold & interest bearing deposits 157,091
74,232 38,189 Cash and due from financial institutions 15,082
17,610 14,957 Premises and equipment 23,610 23,756 22,543 Goodwill
23,794 23,794 23,794 Accrued interest receivable and other assets
59,932 48,809 44,843
Total Assets $ 1,835,090 $
1,728,762 $ 1,647,857
Liabilities and Equity
Certificates of deposit $ 1,238,189 $ 1,099,402 $ 1,012,851
Interest checking 77,108 72,472 76,962 Money market 84,160 80,471
72,543 Savings 33,376 33,450 33,253 Total interest bearing
deposits 1,432,833 1,285,795 1,195,609 Demand deposits
97,263 92,861 92,940 Total deposits 1,530,096 1,378,656
1,288,549 Federal funds purchased & repurchase agreements
11,517 11,296 10,084 FHLB advances 82,980 125,284 142,776 Junior
subordinated debentures 34,000 34,000 34,000 Accrued interest
payable and other liabilities 7,163 8,411 8,235 Total
liabilities 1,665,756 1,557,647 1,483,644 Stockholders’ equity
169,334 171,115 164,213
Total Liabilities and
Stockholders’ Equity $ 1,835,090 $ 1,728,762 $ 1,647,857
Ending common shares outstanding 8,756,440 8,756,057
8,702,330
Book value per common share $ 15.34 $ 15.54 $
14.85
Tangible book value per common share 12.01 12.21 11.74
Asset Quality Data Loan 90 days or more past due
still on accrual $ 5,968 $ 9,896 $ 11,598 Non-accrual loans
78,888 16,369 9,725 Total non-performing loans 84,856 26,265 21,323
Real estate acquired through foreclosures 14,548 12,934 7,839 Other
repossessed assets 80 77 96 Total non-performing assets $
99,484 $ 39,276 $ 29,258 Non-performing loans to total loans 6.00 %
1.89 % 1.58 % Non-performing assets to total assets 5.42 2.27 1.78
Allowance for loan losses to non-performing loans 31.10 83.60 92.16
Allowance for loan losses to total loans 1.87 1.58 1.46
Risk-based Capital Ratios Tier I leverage ratio 9.59 % 10.13
% 10.10 % Tier I risk-based capital ratio 11.93 11.90 12.13 Total
risk-based capital ratio 13.83 13.80 14.05
FTE
employees 278 281 276
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