Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of
PBI Bank, with 18 full-service banking offices in Kentucky,
today reported results for the first quarter of 2010.
The Company reported a 6.4% increase in net income to $3.3
million, or $0.32 per fully diluted common share, for the first
quarter of 2010, compared with $3.1 million, or $0.30 per fully
diluted common share, for the first quarter of 2009. Including the
preferred stock dividend and related accretion, net income
available to common shareholders rose to $2.8 million, or $0.32 per
fully diluted common share, for the first quarter of 2010 compared
with 2.6 million, or $0.30 per fully diluted common share, for
the first quarter of 2009.
“Porter Bancorp reported higher net income in the first quarter
of 2010 compared with the first quarter of 2009 and the linked
fourth quarter of 2009,” stated Maria L. Bouvette, President and
CEO of Porter Bancorp. “Our first quarter net income showed
improvement from both the fourth and first quarters of 2009 due to
continued growth in our net interest income and non-interest
income. Our net interest income benefited from a 7.5% increase in
average earning assets to $1.7 billion and lower cost of funds
compared with the first quarter of last year. Our non-interest
income was up 13.9% to $1.7 million due to growth in service
charges, fiduciary income and an increase in gains on sales of
loans and securities compared with the first quarter of last
year.
“Our provision for loan losses was $3.0 million in the first
quarter of 2010 which is down significantly from $9.0 million
in the 2009 fourth quarter; however, the provision expense is up
from the first quarter of last year due to an increase in
charge-offs,” continued Ms. Bouvette. “We will continue to
aggressively review our loan portfolio. We believe the increase in
our allowance for loan losses to 1.95% of total loans provides
Porter Bancorp with adequate support for the continued weakness in
the economy and our concentration of real estate construction and
development loans that have been impacted adversely by the economic
downturn.”
First Quarter Results
- Net income rose to $3.3 million
for the three months ended March 31, 2010, compared with $3.1
million for the first quarter of 2009. Earnings per diluted common
share increased 6.7% to $0.32 compared with the first quarter of
2009.
- Net interest margin increased 30
basis points to 3.32% in the first quarter of 2010 compared with
3.02% in the first quarter of 2009. The increase in margin since
last year benefited from a lower average cost of funds. Net
interest margin was down from the fourth quarter of 2009 by 25
basis points primarily due to the higher level of non-performing
assets.
- Net interest income increased
18.5% to $14.2 million for the three months ended March 31, 2010,
compared with the same quarter of 2009 and benefited from a 7.5%
increase in average earning assets to $1.7 billion and lower cost
of funds.
- Average loans rose 3.3% to $1.40
billion in the first quarter of 2010 compared with $1.36 billion in
the first quarter of 2009. Net loans decreased 1.0% to $1.33
billion in the first quarter of 2010, compared with
$1.35 billion at March 31, 2009.
- Deposits increased 6.8% to $1.49
billion compared with $1.39 billion at March 31, 2009.
- Total assets increased 1.1% to
$1.76 billion compared with $1.74 billion at March 31, 2009.
- Efficiency ratio improved to
50.9% for the first three months of 2010, compared with 54.1% for
the first quarter of 2009.
- Non-performing loans decreased
$24.4 million during the first quarter to $60.5 million at March
31, 2010 compared with $84.9 million at December 31, 2009. The
decrease was primarily attributable to obtaining a deed in lieu of
foreclosure on a residential construction and development loan that
totaled approximately $24.1 million. This loan was on non-accrual
at December 31, 2009.
- Non-performing assets increased
$20.7 million during the first quarter to $120.2 million at March
31, 2010. The increase was primarily due to the addition of a
residential construction and development credit relationship
totaling approximately $17.6 million in the first quarter of
2010.
Net Interest Income
Net interest income increased 18.5% to $14.2 million for the
three months ended March 31, 2010, an increase of
$2.2 million, compared with $12.0 million for the same period
in 2009. This increase was primarily attributable to an increase in
average earning assets and decreased cost of funds compared with
2009.
Net interest margin increased 30 basis points to 3.32% in the
first quarter of 2010 from our margin of 3.02% in the prior year
first quarter due primarily to increased average interest earning
assets coupled with lower cost of funds. The yield on earning
assets declined 62 basis points from the 2009 first quarter,
compared with a 109 basis point decline in rates paid on
interest-bearing liabilities. Net interest margin decreased 25
basis points to 3.32% from our margin of 3.57% in the fourth
quarter of 2009 due primarily to a lower yield on earning assets.
The yield on earning assets declined 33 basis points from the
fourth quarter of 2009 compared with a 13 basis point decline in
rates paid on interest-bearing liabilities.
Average earning assets rose 7.5% to $1.7 billion for the three
months ended March 31, 2010, compared with the $1.6 billion
for the three months ended March 31, 2009. Average deposits
increased 15.7% to $1.5 billion, up from $1.3 billion for the three
months ended March 31, 2009.
Non-Interest Income
Non-interest income for the first quarter of 2010 increased
13.9%, or $206,000, to $1.69 million compared with
$1.49 million in the first quarter of 2009. The increase in
non-interest income was due to increased service charges on deposit
accounts and income from fiduciary activities, and gains on sales
of loans originated for sale and securities. PBI Bank began
originating residential real estate loans for sale in the secondary
market late in the first quarter of 2009. The Bank retained
servicing rights for the sold loans. The loan sales generated
$91,000 in first quarter 2010 income. There were no comparable loan
sales in the first quarter of 2009.
Non-Interest Expense
Non-interest expense for the first quarter increased 10.6% from
the prior year’s first quarter. This was due primarily to increased
FDIC insurance premiums, franchise tax, and other real estate owned
expense. FDIC insurance premiums rose 53.6% to $705,000 in the
first quarter of 2010 compared with $459,000 in the first quarter
of 2009. Franchise tax expense increased 20.7% to $543,000 in the
first quarter of 2010 compared with $450,000 in the first quarter
of 2009. Other real estate owned expense increased to $378,000 in
the first quarter of 2010 compared with $127,000 in the first
quarter of 2009. Our efficiency ratio continues to outperform our
peers at 50.9% for the first quarter of 2010 and improved from
54.1% in the first quarter of 2009.
Balance Sheet Review
Total assets rose 1.1% to $1.76 billion at March 31, 2010, from
$1.74 billion at March 31, 2009. Since December 31, 2009, total
loans are down 3.7%, or $52.0 million, to $1.36 billion from $1.41
billion at December 31, 2009, primarily due to efforts to move
troubled loans through the collection, foreclosure, and disposition
process. Deposits at March 31, 2010 decreased 2.9% to $1.49 billion
from $1.53 billion at December 31, 2009, primarily due to reduction
of brokered deposits. Demand and savings account deposits increased
by 2.3% and 6.6%, respectively, during the first quarter of
2010.
Asset Quality
Nonperforming loans decreased to $60.5 million, or 4.4% of total
loans, at March 31, 2010, compared with $84.9 million, or 6.0%
of total loans at December 31, 2009, and $24.8 million, or 1.8% of
total loans at March 31, 2009, primarily due to troubled loans
working their way through the collection, foreclosure, and
disposition process. As a result, foreclosed properties at March
31, 2010 rose to $59.7 million compared with $14.5 million at
December 31, 2009, and $10.5 million at March 31, 2009.
Additionally, our ratio of non-performing assets to total assets
increased during the quarter to 6.84% at March 31, 2010, compared
with 5.42% at December 31, 2009.
Our loan loss reserve as a percentage of total loans increased
to 1.95% at March 31, 2010, from 1.87% at December 31, 2009,
and 1.49% at March 31, 2009. Net loan charge-offs for the first
quarter of 2010 were $2.8 million, or 0.2% of average loans
for the quarter.
“The prolonged weakness in the economy continues to pressure the
real estate markets in our area, resulting in reduced demand and
lower real estate values,” stated Ms. Bouvette. “We have increased
our reserve for loan losses over the past year to account for these
factors and believe our reserves reflect these economic factors and
their potential impact on our loan portfolio,” concluded Ms.
Bouvette.
“We continue to take a proactive approach in working through
problem loans to minimize potential losses. In the first quarter,
we obtained deeds in lieu of foreclosure on two multi-unit
residential condominium and patio home developments located in our
primary market area. The loans had a carrying amount of
approximately $41.7 million. We are committed to an orderly
disposition of our borrowers’ properties. We have set up a real
estate department with a dedicated real estate sales expert that
has been successful in selling OREO properties and assisting in the
sale of properties securing non-performing loans. In the first
quarter of 2010, these transactions totaled approximately $17.6
million,” concluded Ms. Bouvette.
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 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, 2010 follows.
PORTER BANCORP, INC.
Unaudited Financial
Information
(in thousands, except share and
per share data)
Three Three Three Months Months Months Ended Ended Ended
3/31/10 12/31/09 3/31/09
Income Statement Data Interest income $ 22,626 $ 23,517 $
23,502 Interest expense 8,449 8,617 11,535
Net interest income 14,177 14,900 11,967 Provision for loan losses
3,000 9,000 1,600
Net interest income after provision 11,177 5,900 10,367
Service charges on deposit accounts 720 793 688 Income from
fiduciary activities 252 230 220 Gains on sales of loans originated
for sale 91 88 - Gains (losses) on sales of securities, net 57 (7 )
1 Other 572 573 577
Non-interest income 1,692 1,677 1,486 Salaries &
employee benefits 3,947 3,519 3,878 Occupancy and equipment 1,022
946 998 FDIC insurance 705 615 459 Franchise tax 543 450 450 Other
real estate owned expense 378 449 127 Professional fees 266 295 228
Communications expense 188 161 155 Postage and delivery 186 191 184
Advertising 96 88 158 Other 718 654 639
Non-interest expense 8,049 7,368 7,276 Income before income
taxes 4,820 209 4,577 Income tax expense 1,564 (17 ) 1,516
Net income 3,256 226 3,061 Less: Dividends on preferred stock 438
438 438 Accretion on preferred stock 44 44 44 Net income
available to common $ 2,774 $ (256 ) $ 2,579
Weighted average shares – Basic & Diluted 8,773,398
8,756,440 8,709,229 Basic and diluted earnings per
common share $ 0.32 $ (0.03 ) $ 0.30 Cash dividends declared per
common share $ 0.20 $ 0.20 $ 0.20
PORTER BANCORP, INC.
Unaudited Financial
Information
(in thousands, except share and
per share data)
Three Three Three Months Months Months Ended Ended Ended
3/31/10 12/31/09 3/31/09
Average Balance Sheet Data Assets $ 1,834,208 $ 1,750,225 $
1,696,575 Loans 1,404,486 1,394,429 1,360,193 Earning assets
1,743,509 1,667,417 1,621,569 Deposits 1,545,469 1,440,017
1,335,761 Long-term debt and advances 100,307 116,122 176,065
Interest bearing liabilities 1,558,604 1,469,548 1,422,584
Stockholders’ equity 169,759 173,440 165,756
Performance Ratios Return on average assets 0.72 % 0.05 %
0.73 % Return on average equity 7.78 0.52 7.49 Yield on average
earning assets (tax equivalent) 5.29 5.62 5.91 Cost of interest
bearing liabilities 2.20 2.33 3.29 Net interest margin (tax
equivalent) 3.32 3.57 3.02 Efficiency ratio 50.90 44.43 54.09
Loan Charge-off Data Loans charged-off $ (2,906 ) $
(4,619 ) $ (983 ) Recoveries 57 53 102
Net charge-offs $ (2,849 ) $ (4,566 ) $ (881 )
PORTER BANCORP, INC.
Unaudited Financial
Information
(in thousands, except share and
per share data)
As of As of As of 3/31/10 12/31/09 3/31/09
Assets Loans $ 1,361,216 $ 1,413,252 $ 1,369,087 Loan loss
reserve (26,543 ) (26,392 ) (20,371 )
Net loans 1,334,673 1,386,860 1,348,716 Securities available for
sale 180,582 168,721 174,260 Federal funds sold & interest
bearing deposits 81,355 157,091 72,766 Cash and due from financial
institutions 11,127 15,082 49,873 Premises and equipment 23,251
23,610 22,396 Other real estate owned 59,688 14,548 10,470 Goodwill
23,794 23,794 23,794 Accrued interest receivable and other assets
42,857 45,384 36,118
Total Assets $ 1,757,327 $ 1,835,090 $ 1,738,393
Liabilities and Equity Certificates of deposit $
1,204,022 $ 1,238,189 $ 1,078,007 Interest checking 76,305 77,108
79,831 Money market 69,618 84,160 84,379 Savings 35,577
33,376 36,958
Total interest bearing deposits 1,385,522 1,432,833 1,279,175
Demand deposits 99,518 97,263 111,778
Total deposits 1,485,040 1,530,096 1,390,953 Federal funds
purchased & repurchase agreements 11,595 11,517 12,534 FHLB
advances 47,285 82,980 127,192 Junior subordinated debentures
34,000 34,000 34,000 Accrued interest payable and other liabilities
6,670 7,163 8,493
Total liabilities 1,584,590 1,665,756 1,573,172 Stockholders’
equity 172,737 169,334 165,221
Total Liabilities and Stockholders’ Equity $ 1,757,327 $
1,835,090 $ 1,738,393
Ending shares outstanding 8,822,844 8,756,440
8,754,078
Book value per common share $ 15.61 $ 15.34 $
14.88
Tangible book value per common share 12.06 12.01 11.79
Asset Quality Data Loan 90 days or more past due
still on accrual $ 5,913 $ 5,968 $ 10,002 Non-accrual loans
54,545 78,888 14,802
Total non-performing loans 60,458 84,856 24,804 Real estate
acquired through foreclosures 59,688 14,548 10,470 Other
repossessed assets 80 80 117
Total non-performing assets $ 120,226 $ 99,484 $ 35,391
Non-performing loans to total loans 4.44 % 6.00 % 1.81 %
Non-performing assets to total assets 6.84 5.42 2.04 Allowance for
loan losses to non-performing loans 43.90 31.10 82.13 Allowance for
loan losses to total loans 1.95 1.87 1.49
Risk-based
Capital Ratios Tier I leverage ratio 9.24 % 9.59 % 9.76 % Tier
I risk-based capital ratio 12.20 11.93 12.00 Total risk-based
capital ratio 14.12 13.83 13.91
FTE employees 280 278
275
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