PBIB Porter Bancorp, Inc. (delisted)

Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, with 18 full-service banking offices in Kentucky, today reported unaudited results for the fourth quarter and year ended December 31, 2012.

The Company reported net loss to common shareholders of $7.0 million, or ($0.59) per diluted share, for the fourth quarter of 2012 compared with net loss to common shareholders of $54.5 million, or ($4.64) per diluted share, for the fourth quarter of 2011. Net loss to common shareholders for the year ended December 31, 2012, was $33.4 million, or ($2.85) per diluted common share, compared with net loss to common shareholders of $105.2 million, or ($8.98) per diluted share, for the year ended December 31, 2011. The loss for the year ended December 31, 2011, includes a non-recurring 100% goodwill impairment charge of $23.8 million recorded in the second quarter of 2011, and the establishment of a 100% deferred tax valuation allowance of $31.7 million in the fourth quarter of 2011.

Financial performance continues to be negatively impacted by the Bank’s high level of nonperforming loans and other real estate owned. Non-performing loans increased to $94.6 million, or 10.52% of total loans, at December 31, 2012, compared with $90.1 million, or 9.47% of total loans, at September 30, 2012. Non-performing assets decreased on a dollar basis and increased on a percentage basis to $138.3 million, or 11.9% of total assets, compared with $139.0 million, or 10.8% of total assets, at September 30, 2012.

Foreclosed properties at December 31, 2012, decreased to $43.7 million compared with $48.8 million at September 30, 2012, and increased compared with $41.4 million at December 31, 2011. During the fourth quarter of 2012, the Company acquired $2.0 million of OREO, sold $5.1 million of OREO, and recorded OREO fair value write-downs totaling $2.1 million to reflect new appraisals or marketing prices during the fourth quarter of 2012.

Provision for loan losses totaled $7.0 million for the fourth quarter of 2012 and declined from $25.5 million in the third quarter of 2012, and $35.8 million in the fourth quarter of 2011. Provision for loan losses totaled $40.3 million for the year ended December 31, 2012, compared to $62.6 million for the year ended December 31, 2011.

Net loan charge-offs totaled $4.3 million for the fourth quarter of 2012 and was down from $23.1 million in the third quarter of 2012, and $22.7 million in the fourth quarter of 2011. Net loan charge-offs totaled $36.1 million for the year ended December 31, 2012, compared with $44.3 million for the year ended December 31, 2011.

Net interest income was lower in the three and twelve months ended December 31, 2012, compared with the same periods in 2011, as average earning assets, primarily loans, declined $253.1 million and net interest margin declined 9 basis points between the twelve months ended December 31, 2012, and the twelve months ended December 31, 2011.

At December 31, 2012, PBI Bank’s Tier 1 leverage ratio was 5.37% and its Total risk-based capital ratio was 9.82%, which are below the minimums of 9.0% and 12.0% required by the Bank’s Consent Order with its primary regulators. At December 31, 2012, Porter Bancorp’s Tier 1 leverage ratio was 4.50%, compared with 5.00% at September 30, 2012, and 6.53% at December 31, 2011, and its Total risk-based capital ratio was 9.81% compared with 10.01% at September 30, 2012, and 11.22% at December 31, 2011.

Management and the Board of Directors are evaluating appropriate strategies for increasing the Company’s capital in order to meet the capital requirements of our Consent Order. These include, among other things, a possible public offering or private placement of common stock to new and existing shareholders. We have engaged Sandler O’Neill & Partners, LP to act as our financial advisor and to assist our Board in this evaluation.

Asset quality remediation, capital restoration, and lowering the risk profile of the Company will be major objectives during 2013. Under the direction of John T. Taylor, President and CEO of PBI Bank, our leadership team remains focused on serving the bank’s customers and communities throughout Central Kentucky.

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, 2012 follows.

          PORTER BANCORP, INC. 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 12/31/12 9/30/12 12/31/11 12/31/12 12/31/11   Income Statement Data Interest income $ 13,175 $ 13,987 $ 16,637 $ 57,729 $ 73,554 Interest expense 3,601 3,855 4,986 15,774 22,039 Net interest income 9,574 10,132 11,651 41,955 51,515 Provision for loan losses 7,000 25,500 35,800 40,250 62,600 Net interest income after provision 2,574 (15,368 ) (24,149 ) 1,705 (11,085 )   Service charges on deposit accounts 566 563 630 2,239 2,609 Income from fiduciary activities 374 261 255 1,177 993 Bank card interchange fees 174 180 168 727 668 Other real estate owned rental income 178 180 53 420 200 Gains on sales of loans originated for sale 78 138 49 338 713 Gains on sales of securities, net (294 ) — — 3,236 1,108 Other than temporary impairment on securities — — (41 ) — (41 ) Other 330 399 367 1,453 1,583 Non-interest income 1,406 1,721 1,481 9,590 7,833   Salaries & employee benefits 4,090 4,264 3,134 16,648 15,218 Occupancy and equipment 816 971 819 3,642 3,729 Goodwill impairment — — — — 23,794 Other real estate owned expense 2,883 5,204 7,020 10,549 47,525 FDIC insurance 571 559 830 2,835 3,470 Loan collection expense 704 792 520 2,442 2,509 Franchise tax 494 496 482 2,174 2,228 Professional fees 286 776 429 1,985 1,392 Communications expense 187 175 169 710 678 Borrowing prepayment fees — — 486 — 486 Postage and delivery 115 108 117 454 485 Advertising 49 44 32 154 314 Other 638 761 658 2,699 2,445 Non-interest expense 10,833 14,150 14,696 44,292 104,273   (Loss) before income taxes (6,853 ) (27,797 ) (37,364 ) (32,997 ) (107,525 ) Income tax expense (benefit) — (65 ) 18,591 (65 ) (218 ) Net (loss) (6,853 ) (27,732 ) (55,955 ) (32,932 ) (107,307 ) Less: Dividends on preferred stock (438 ) (437 ) (438 ) (1,750 ) (1,750 ) Accretion on preferred stock (45 ) (44 ) (44 ) (179 ) (177 ) Loss allocated to participating securities 343 1,264 1,980 1,429 4,080 Net (loss) to common shareholders $ (6,993 ) $ (26,949 ) $ (54,457 ) $ (33,432 ) $ (105,154 )   Weighted average shares – Basic 11,762,330 11,751,818 11,724,456 11,746,719 11,715,461 Weighted average shares – Diluted 11,762,330 11,751,818 11,724,456 11,746,719 11,715,461   Basic (loss) per common share $ (0.59 ) $ (2.29 ) $ (4.64 ) $ (2.85 ) $ (8.98 ) Diluted (loss) per common share $ (0.59 ) $ (2.29 ) $ (4.64 ) $ (2.85 ) $ (8.98 ) Cash dividends declared per common share $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.02             PORTER BANCORP, INC. 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 12/31/12 9/30/12 12/31/11 12/31/12 12/31/11 Average Balance Sheet Data Assets $ 1,264,867 $ 1,326,457 $ 1,569,669 $ 1,341,565 $ 1,659,959 Loans 928,974 1,008,053 1,189,123 1,033,320 1,243,474 Earning assets 1,207,711 1,261,864 1,463,093 1,281,735 1,534,875 Deposits 1,162,015 1,196,580 1,379,093 1,217,083 1,434,462 Long-term debt and advances 37,710 38,328 44,040 38,634 48,523 Interest bearing liabilities 1,085,424 1,126,045 1,320,481 1,144,480 1,386,740 Stockholders’ equity 53,229 81,029 130,250 75,679 159,434   Performance Ratios Return on average assets (2.16) % (8.32) % (14.14) % (2.45) % (6.46) % Return on average equity (51.22) (136.16) (170.44) (43.52) (67.30) Yield on average earning assets (tax equivalent) 4.38 4.45 4.55 4.54 4.83 Cost of interest bearing liabilities 1.32 1.36 1.50 1.38 1.59 Net interest margin (tax equivalent) 3.19 3.23 3.20 3.31 3.40 Efficiency ratio 96.09 119.38 111.56 91.68 138.09   Loan Charge-off Data Loans charged-off $ (5,008 ) $ (23,487 ) $ (22,816 ) $ (37,515 ) $ (44,646 ) Recoveries 669 412 103 1,366   340 Net charge-offs $ (4,339 ) $ (23,075 ) $ (22,713 ) $ (36,149 ) $ (44,306 )     Non-Accrual Loan Activity Non-accrual loans at beginning of period $ 88,632 $ 81,653 $ 59,132 $ 92,020 $ 59,799 Loans returned to accrual status — — (123 ) — (7,792 ) Net principal pay-downs (3,576 ) (5,768 ) (5,918 ) (18,668 ) (15,838 ) Charge-offs (3,856 ) (13,442 ) (14,820 ) (24,512 ) (30,358 ) Loans foreclosed and transferred to OREO (1,998 ) (3,339 ) (7,516 ) (24,409 ) (24,549 ) Loan collateral repossessed — — — — (10 ) Loans placed on non-accrual during the period 15,315 29,528 61,265 70,086 110,768 Non-accrual loans at end of period $ 94,517 $ 88,632 $ 92,020 $ 94,517 $ 92,020   Other Real Estate Owned (OREO) Activity (Net of Allowance) OREO at beginning of period $ 48,837 $ 54,365 $ 44,933 $ 41,449 $ 67,635 Real estate acquired 1,997 3,405 10,685 33,528 41,917 Valuation adjustment write-downs (2,064 ) (4,260 ) (4,172 ) (7,154 ) (34,874 ) Proceeds from sales of properties (4,908 ) (4,140 ) (8,657 ) (22,481 ) (25,990 ) Loss on sales, net (191 ) (533 ) (1,340 ) (1,672 ) (8,889 ) Capital improvements — — — 1 1,650 OREO at end of period $ 43,671 $ 48,837 $ 41,449 $ 43,671 $ 41,449         PORTER BANCORP, INC. Unaudited Financial Information

(in thousands, except share and per share data)

  As of As of As of 12/31/12 9/30/12 12/31/11 Assets Loans $ 899,599 $ 952,021 $ 1,136,717 Loan loss reserve   (56,680 ) (54,019 ) (52,579 ) Net loans 842,919 898,002 1,084,138 Securities available for sale 178,476 198,148 158,833 Federal funds sold & interest bearing deposits 41,161 69,928 92,034 Cash and due from financial institutions 8,411 11,854 13,928 Premises and equipment 20,805 20,955 21,541 Other real estate owned 43,671 48,837 41,449 Deferred tax assets — — — Accrued interest receivable and other assets   27,188 38,317   43,501 Total Assets $ 1,162,631 $ 1,286,041 $ 1,455,424   Liabilities and Equity Certificates of deposit $ 760,573 $ 882,303 $ 1,024,333 Interest checking 87,234 80,524 87,653 Money market 63,715 63,594 64,302 Savings   39,227 39,703   36,357 Total interest bearing deposits 950,749 1,066,124 1,212,645 Demand deposits   114,310 111,403   111,118 Total deposits 1,065,059 1,177,527 1,323,763 Federal funds purchased & repurchase agreements 2,634 2,403 1,738 FHLB advances 5,604 5,960 7,116 Junior subordinated debentures 31,975 32,200 32,650 Accrued interest payable and other liabilities   10,169 12,967   7,628 Total liabilities 1,115,441 1,231,057 1,372,895 Stockholders’ equity   47,190 54,984   82,529 Total Liabilities and Stockholders’ Equity $ 1,162,631 $ 1,286,041 $ 1,455,424   Ending shares outstanding 12,002,421 12,007,127 11,824,472 Book value per common share $ 0.74 $ 1.39 $ 3.74 Tangible book value per common share 0.58 1.22 3.54   Asset Quality Data Loan 90 days or more past due still on accrual $ 86 $ 1,486 $ 1,350 Non-accrual loans   94,517 88,632   92,020 Total non-performing loans 94,603 90,118 93,370 Real estate acquired through foreclosures 43,671 48,837 41,449 Other repossessed assets   — 5 5 Total non-performing assets $ 138,274 $ 138,960   $ 134,824 Non-performing loans to total loans 10.52 % 9.47 % 8.22 % Non-performing assets to total assets 11.89 10.81 9.26 Allowance for loan losses to non-performing loans 59.91 59.94 56.31 Allowance for loan losses to total loans 6.30 5.68 4.63   Risk-based Capital Ratios Tier 1 leverage ratio 4.50 % 5.00 % 6.53 % Tier 1 risk-based capital ratio 6.46 7.03 9.23 Total risk-based capital ratio 9.81 10.01 11.22   FTE employees 278 291 291