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, 2010.
The Company reported a net loss available to common shareholders
of $9.0 million, or $(0.77) per diluted share, for the fourth
quarter of 2010 compared with a net loss of $256,000, or $(0.03)
per diluted share, for the fourth quarter of 2009. Net loss
available to common shareholders for 2010 was $6.2 million, or
$(0.60) per fully diluted common share, compared with net income of
$9.1 million, or $1.00 per fully diluted common share, for
2009.
“Porter Bancorp’s loss for the fourth quarter and 2010 was due
to the continued weakness in the real estate market and its effects
on values of collateral securing our loans and other real estate
owned, as well as some customers’ ability to repay their loans,”
stated Maria L. Bouvette, President and CEO of Porter Bancorp. “As
a result of these trends, we charged off a high level of
construction and land development loans at year-end and wrote-down
other real estate owned (OREO) to reflect lower appraisal
values.
“Our primary focus is to improve Porter Bancorp’s profitability,
preserve our strong capital base and reduce the credit risks in our
loan portfolio. Our core business remains solid with continued
growth in our net interest margin and non-interest income since the
fourth quarter of last year. Our capital ratios were strengthened
during 2010 with capital raises of almost $32 million. At the end
of 2010, our total risk-based capital ratio rose to 16.32% from
13.83% at year-end 2009, well above the 10.0% requirement for a
well-capitalized institution.
“Our non-performing assets have increased from $119.5 million at
September 30, 2010, to $128 million at December 31, 2010. The
bulk of the non-performing assets are the result of weakness in our
construction and land development portfolio. We have made solid
progress in reducing our exposure to higher risk construction and
land development loans. Since year-end 2008, our construction and
land development loans are down 46.3% and represented only 15.3% of
our loan portfolio at year-end 2010. We also continue to be
diligent in moving non-performing loans through the system of
collection or foreclosure to minimize our potential losses. We are
diligently working to reduce our non-performing assets. We believe
these measures will improve our future profitability when the
economy strengthens in our markets,” continued Ms. Bouvette.
Fourth Quarter Results
- Net loss available to common
shareholders was $9.0 million for the three months ended December
31, 2010, compared with a net loss of $256,000 for the fourth
quarter of 2009. Net loss per fully diluted common share was
$(0.77) in the fourth quarter of 2010 compared with $(0.03) per
share in the fourth quarter of 2009.
- Net interest margin increased 3 basis
points to 3.60% in the fourth quarter of 2010 compared with 3.57%
in the fourth quarter of 2009. The increase in margin since last
year benefited from a lower average cost of funds.
- We recorded a gain on sale of
securities totaling $2.9 million during the fourth quarter. We made
a strategic decision to liquidate certain mortgage backed
securities and corporate bonds during the quarter.
- Average loans decreased 5.5% to $1.32
billion in the fourth quarter of 2010 compared with $1.39 billion
in the fourth quarter of 2009. Net loans decreased 8.5% to $1.27
billion in the fourth quarter of 2010, compared with $1.39 billion
at December 31, 2009. The decrease in loans is due to a slowdown in
new loan originations in certain markets, loan charge-offs and
transfers to OREO.
- Deposits decreased 4.1% to $1.47
billion compared with $1.53 billion at December 31, 2009. The
decrease in deposits follows management’s strategy to match
liability funding levels with lower loan balances.
- Total assets decreased 6.1% to $1.72
billion compared with $1.84 billion at December 31, 2009.
- Efficiency ratio was 107.5% in the
fourth quarter of 2010, compared with 44.4% in the prior year
fourth quarter. Our efficiency ratio increased due to higher
non-interest expense, primarily OREO expense. Despite the higher
credit-related costs, the Company continues to control its
discretionary expenses.
- Non-performing loans increased $14.6
million, or 31.8%, during the fourth quarter to $60.4 million at
December 31, 2010, compared with $45.8 million at September 30,
2010. The increase was primarily in the construction and land
development segment of our business.
- Non-performing assets increased $8.6
million, or 7.2%, during the fourth quarter to $128.1 million at
December 31, 2010, from $119.5 million at September 30, 2010. The
increase was primarily attributable to non-performing loans moving
through the collection, foreclosure and disposition process.
Net Interest Income
Net interest income decreased 5.5% to $14.1 million for the
three months ended December 31, 2010, a decrease of $814,000,
compared with $14.9 million for the same period in 2009. The
decrease in net interest income was primarily attributable to lower
average interest earning assets coupled with the impact of
non-accrual loan levels. Net interest income rose 6.5% to $57.6
million for the year ended December 31, 2010, an increase of $3.5
million, compared with $54.1 million for the same period in 2009.
The increase in net interest income was primarily attributable to
an increase in net interest margin compared with 2009.
Net interest margin increased 3 basis points to 3.60% in the
fourth quarter of 2010 from our margin of 3.57% in the prior year
fourth quarter due primarily to lower cost of funds. The yield on
earning assets declined 44 basis points from the 2009 fourth
quarter while rates paid on interest-bearing liabilities declined
57 basis points. Net interest margin decreased 13 basis points to
3.60% from our margin of 3.73% in the third quarter of 2010 due
primarily to a lower yield on average earning assets. The yield on
earning assets declined 26 basis points while the cost of
interest-bearing liabilities decreased 17 basis points from the
third quarter of 2010.
Average earning assets declined 6.2% to $1.56 billion for the
three months ended December 31, 2010, compared with $1.67 billion
for the three months ended December 31, 2009. The decline in
average earning assets was due primarily to lower average loans
resulting from a slowdown in new loan originations and loans moved
to other real estate owned (OREO).
Average deposits decreased 0.4% to $1.43 billion, down from
$1.44 billion for the three months ended
December 31, 2009.
Non-Interest Income
Non-interest income for the fourth quarter of 2010 increased
166.1%, or $2.8 million, to $4.5 million compared with $1.7 million
in the fourth quarter of 2009. The increase in non-interest income
was due primarily to $2.9 million in net gains on sales of
securities in the fourth quarter of 2010 compared with a net loss
of $7,000 on sales of securities in the fourth quarter of 2009.
Non-Interest Expense
Non-interest expense for the fourth quarter of 2010 increased
from the prior year’s fourth quarter due primarily to increased
OREO expense. OREO expense increased to $9.9 million in the fourth
quarter of 2010 compared with $449,000 in the fourth quarter of
2009, due primarily to increased losses on sales of OREO, OREO
write-downs and OREO maintenance costs. FDIC insurance expense
increased 14.6% to $705,000 in the fourth quarter of 2010 compared
with $615,000 in the fourth quarter of 2009. State franchise tax
expense increased 20.7% to $543,000 in the fourth quarter of 2010
compared with $450,000 in the fourth quarter of 2009.
Balance Sheet Review
Total assets declined 6.1%, or $111.1 million, to $1.72 billion
at December 31, 2010, from $1.84 billion at December 31, 2009.
The Company’s loan portfolio decreased 7.8%, or $110.2 million, to
$1.30 billion from $1.41 billion at December 31, 2009, due
primarily to softness in loan demand and troubled loans moving
through the collection, foreclosure, and disposition process.
Deposits at December 31, 2010 decreased 4.1% to $1.47 billion from
$1.53 billion at December 31, 2009, due primarily to fewer
certificates of deposit.
Asset Quality
Non-performing loans increased to $60.4 million, or 4.63% of
total loans, at December 31, 2010, compared with $45.8 million, or
3.45% of total loans, at September 30, 2010. Non-performing loans
were down $24.5 million from $84.9 million, or 6.00% of total
loans, at December 31, 2009, due primarily to troubled loans
working their way through the collection, foreclosure and
disposition process. Foreclosed properties at December 31, 2010,
decreased to $67.6 million compared with $73.6 million at September
30, 2010, and increased in comparison with $14.5 million at
December 31, 2009. Our ratio of non-performing assets to total
assets increased during the quarter to 7.43% at December 31, 2010,
compared with 6.71% at September 30, 2010, and 5.42% at December
31, 2009.
Our loan loss reserve as a percentage of total loans increased
to 2.63% at December 31, 2010, compared with 1.87% at December 31,
2009. Net loan charge-offs for the fourth quarter of 2010 were
$10.6 million, or 0.81% of average loans for the quarter.
Our provision for loan losses was $15.5 million in the fourth
quarter of 2010, compared with $5.0 million in the third quarter of
2010, and $9.0 million in the prior year fourth quarter.
“We remain focused on improving loan quality and reducing our
level of non-performing assets,” continued Ms. Bouvette. “We
believe our active write-down of OREO to reflect declining values
during the year, and the charge-offs made at year-end 2010 have
better aligned our loan portfolio values with the current economic
conditions in our markets.”
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. The words “believe,”
“may,” “should,” “anticipate,” “estimate,” “expect,” “intend,”
“objective,” “seek,” “plan,” “strive” or similar words, or
negatives of these words, identify forward-looking statements.
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, 2010 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 12/31/10 9/30/10
12/31/09 12/31/10 12/31/09
Income Statement Data Interest income $ 20,315 $ 21,340 $
23,517 $ 86,407 $ 94,466 Interest expense 6,229
6,764 8,617 28,841
40,412
Net interest income 14,086 14,576 14,900 57,566 54,054 Provision
for loan losses 15,500 5,000
9,000 30,100 14,200
Net interest income after provision (1,414 ) 9,576 5,900 27,466
39,854 Service charges on deposit accounts 714 757 793 2,984
3,112 Income from fiduciary activities 236 226 230 987 875 Net gain
on sales of loans originated for sale 144 135 88 554 411 Net gain
(loss) on sales of securities, net 2,896 2,175 (7 ) 5,152 315 Other
than temporary impairment on securities (132 ) – – (597 ) – Other
604 638 573 2,502
2,381
Non-interest income 4,462 3,931 1,677 11,582 7,094 Salaries
& employee benefits 3,176 3,849 3,519 14,903 15,009 Occupancy
and equipment 988 1,070 946 4,095 3,918 FDIC insurance 705 855 615
2,971 2,203 FDIC special insurance assessment – – – – 781 Franchise
tax 543 543 450 2,172 1,800 Other real estate owned expense 9,859
2,163 449 16,254 1,155 Professional fees 270 239 295 1,067 901
Postage and delivery 153 183 191 722 752 Communications expense 199
179 161 737 729 Advertising 131 104 88 408 492 Other 943
764 654 3,149
2,716
Non-interest expense 16,967 9,949 7,368 46,478 30,456 Income
(loss) before income taxes (13,919 ) 3,558 209 (7,430 ) 16,492
Income tax expense (benefit) (4,989 ) 1,137
(17 ) (3,046 ) 5,424
3 Net income (loss) (8,930 ) 2,421 226 (4,384 ) 11,068 Less:
Dividends on preferred stock 437 498 438 1,810 1,750 Accretion on
preferred stock 45 44 44 177 176 Earnings (loss) allocated to
participating securities (365 ) 88 –
(184 ) – Net income (loss) available to
common $ (9,047 ) $ 1,791 $ (256 ) $ (6,187 ) $ 9,142
Weighted average shares – Basic 11,707,334 11,021,658
9,194,262 10,333,499 9,182,487 Weighted average shares – Diluted
11,707,334 11,580,371 9,194,262 10,333,499 9,182,487 Basic
earnings (loss) per common share $ (0.77 ) $ 0.16 $ (0.03 ) $ (0.60
) $ 1.00 Diluted earnings (loss) per common share $ (0.77 ) $ 0.15
$ (0.03 ) $ (0.60 ) $ 1.00 Cash dividends declared per common share
$ 0.01 $ 0.10 $ 0.19 $ 0.49 $ 0.76
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 12/31/10 9/30/10
12/31/09 12/31/10 12/31/09
Average Balance Sheet Data Assets $ 1,716,430 $ 1,704,043 $
1,750,225 $ 1,747,648 $ 1,714,131 Loans 1,317,606 1,335,357
1,394,429 1,353,295 1,371,034 Earning assets 1,564,243 1,563,599
1,667,417 1,618,541 1,637,103 Deposits 1,433,921 1,402,842
1,440,017 1,459,041 1,385,572 Long-term debt and advances 60,845
81,441 116,122 81,741 140,259 Interest bearing liabilities
1,402,052 1,393,425 1,469,548 1,450,133 1,437,706 Stockholders’
equity 201,478 201,126 173,440 188,015 168,752
Performance Ratios Return on average assets -2.06 % 0.56 %
0.05 % -0.25 % 0.65 % Return on average equity -17.58 4.78 0.52
-2.33 6.56 Yield on average earning assets (tax equivalent) 5.18
5.44 5.62 5.37 5.80 Cost of interest bearing liabilities 1.76 1.93
2.33 1.99 2.81 Net interest margin (tax equivalent) 3.60 3.73 3.57
3.59 3.33 Efficiency ratio 107.49 60.92 44.43 71.96 50.06
Loan Charge-off Data Loans charged-off $ (10,638 ) $ (2,514
) $ (4,619 ) $ (22,461 ) $ (7,731 ) Recoveries 31 70
53 254 271
Net charge-offs $ (10,607 ) $ (2,444 ) $ (4,566 ) $ (22,207 ) $
(7,460 )
PORTER BANCORP, INC. AND
SUBSIDIARY
Unaudited Financial Information
(in thousands, except share and per share
data)
As of As of As of
12/31/10 9/30/10 12/31/09
Assets Loans $ 1,303,013 $ 1,328,695 $ 1,413,252 Loan loss
reserve (34,285 ) (29,392 ) (26,392 )
Net loans 1,268,728 1,299,303 1,386,860 Securities available for
sale 106,309 150,569 168,721 Federal funds sold & interest
bearing deposits 6,742 120,591 157,091 Cash and due from financial
institutions 178,693 46,279 15,082 Premises and equipment 22,468
22,708 23,610 Other real estate owned 67,635 73,645 14,548 Goodwill
23,794 23,794 23,794 Accrued interest receivable and other assets
49,583 43,290 45,384
Total Assets $ 1,723,952 $ 1,780,179 $
1,835,090
Liabilities and Equity Certificates of deposit $
1,166,820 $ 1,093,032 $ 1,238,189 Interest checking 87,690 80,153
77,108 Money market 80,082 78,232 84,160 Savings 34,678
35,222 33,376
Total interest bearing deposits 1,369,270 1,286,639 1,432,833
Demand deposits 98,398 103,424
97,263
Total deposits 1,467,668 1,390,063 1,530,096 Federal funds
purchased & repurchase agreements 11,616 34,083 11,517 FHLB
advances 15,022 110,763 82,980 Junior subordinated debentures
33,550 33,775 34,000 Accrued interest payable and other liabilities
6,681 8,922 7,163
Total liabilities 1,534,537 1,577,606 1,665,756 Stockholders’
equity 189,415 202,573 169,334
Total Liabilities and Stockholders’ Equity $ 1,723,952
$ 1,780,179 $ 1,835,090
Ending shares outstanding 11,846,107 11,845,776
9,194,262
Book value per common share $ 12.76 $ 13.87 $
14.61
Tangible book value per common share 10.33 11.11 11.44
Asset Quality Data Loan 90 days or more past due
still on accrual $ 594 $ 7,048 $ 5,968 Non-accrual loans
59,799 38,784 78,888
Total non-performing loans 60,393 45,832 84,856 Real estate
acquired through foreclosures 67,635 73,645 14,548 Other
repossessed assets 52 53 80
Total non-performing assets $ 128,080 $ 119,530 $
99,484
Non-performing loans to total loans 4.63 % 3.45 % 6.00 %
Non-performing assets to total assets 7.43 6.71 5.42 Allowance for
loan losses to non-performing loans 56.77 64.13 31.10 Allowance for
loan losses to total loans 2.63 2.21 1.87
Risk-based
Capital Ratios Tier I leverage ratio 11.08 % 11.71 % 9.59 %
Tier I risk-based capital ratio 14.39 14.44 11.93 Total risk-based
capital ratio 16.32 16.35 13.83
FTE employees 286 288
278
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