Second Quarter 2014 Net Loss Attributable to
Common Shareholders of $672,000
Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of
PBI Bank, with 18 full-service banking offices in
Kentucky, today reported unaudited results for the second quarter
of 2014.
The Company reported a net loss attributable to common
shareholders of $672,000, or ($0.06) per diluted share, for the
second quarter of 2014 compared with a net loss of $1.7 million, or
($0.14) per diluted share, for the second quarter of 2013. Net loss
attributable to common shareholders for the six months ended June
30, 2014, was $1.6 million, or ($0.14) per diluted common share,
compared with net loss attributable to common shareholders of $2.2
million, or ($0.19) per diluted share, for the six months ended
June 30, 2013.
Our primary initiatives for 2014 are to continue reducing
non-performing assets, restore capital, and return to sustainable
profitability while continuing to serve our customers and develop
new quality financial relationships.
Second Quarter 2014 Financial Performance Highlights
- Net Interest Income – Net
interest income increased to $7.6 million for the second quarter of
2014 compared with $7.3 million in the first quarter of 2014 and
decreased from $8.4 million in the second quarter of 2013 as
average loans declined to $677.6 million for the second quarter of
2014 compared with $698.2 million in the first quarter of 2014 and
$806.9 million in the second quarter of 2013. Net interest margin
increased to 3.13% in the second quarter of 2014, compared with
2.96% in the first quarter of 2014, and declined from 3.24% in the
second quarter of 2013. While earning assets have decreased and
interest expense has remained relatively flat, net interest margin
was positively impacted in the second quarter by the collection of
previously charged-off accrued uncollected interest and late
charges of approximately $240,000 along with the full unpaid
principal balance on three nonaccrual loans.
- Provision for Loan Losses – No
provision for loan losses expense was recorded for the second or
first quarters of 2014, or in the second quarter of 2013 due to the
downsizing of the loan portfolio, declining historical loss rates,
and a reduction in loans migrating downward in risk grade
classification. The allowance for loan losses for loans evaluated
collectively for impairment was 3.95% at June 30, 2014, compared
with 4.10% at March 31, 2014, and 4.56% at June 30, 2013.
- Non-performing Assets -
Non-performing assets, which include loans past due 90 days and
still accruing, loans on nonaccrual, and other real estate owned
(OREO), decreased to $107.3 million, or 10.20% of total assets at
June 30, 2014, compared with $123.3 million, or 11.59% of
total assets, at March 31, 2014, and $159.3 million, or 14.86% of
total assets, at June 30, 2013.
Non-performing loans decreased to $44.4
million, or 6.90% of total loans, at June 30, 2014, compared with
$77.3 million, or 11.33% of total loans, at March 31, 2014.
The decline was primarily driven by $18.5 million of nonaccrual
loans migrating to OREO, $12.2 million in principal payments
received on nonaccrual loans, and $2.9 million of charge-offs.
Non-performing loans and OREO remain at
elevated levels and continue to negatively impact financial
performance.
June 30,
2014
March 31,
2014
December 31,
2013
September 30,
2013
June 30,
2013
(in thousands) Past due loans:
30 – 59 days $ 3,057 $ 5,667 $ 10,696 $ 10,018 $ 8,600 60 –
89 days 991 1,232 775 7,582 2,979 90 days or more — — 232 — 71
Nonaccrual loans 44,375 77,344 101,767
106,922 112,185
Total past due and nonaccrual loans
$
48,423
$
84,243 $ 113,470 $ 124,522 $ 123,835
Loans past due 90 days or more
$
—
$
— $ 232 $ — $ 71 Nonaccrual loans 44,375 77,344 101,767 106,922
112,185 OREO 62,935 45,918 30,892
41,857 47,030
Total non-performing assets
$
107,310
$
123,262 $ 132,891 $ 148,779 $ 159,286
In addition to nonaccrual loans and OREO,
loans classified as Troubled Debt Restructures (TDRs) and on
accrual totaled $32.4 million at June 30, 2014, compared to $41.8
million at March 31, 2014 and $54.9 million at June 30, 2013.
OREO at June 30, 2014 increased to $62.9
million, compared with $45.9 million at March 31, 2014, and $47.0
million at June 30, 2013. The Company acquired $19.6 million in
OREO and sold $2.2 million in OREO during the second quarter of
2014. Fair value write-downs arising from new appraisals or lower
marketing prices totaled $400,000 in the second quarter of 2014,
compared with $250,000 in the first quarter of 2014 and $977,000 in
the second quarter of 2013.
- Non-interest Expense –
Non-interest expense increased $442,000 to $8.9 million for the
second quarter of 2014, compared with $8.5 million for the first
quarter of 2014, and decreased $2.9 million compared with $11.8
million for the second quarter of 2013. The increase from the first
quarter of 2014 was due to increases in salary and employee benefit
expenses, OREO expenses, and professional fees. The reduction in
non-interest expense from the second quarter of 2013 was
attributable primarily to lower loan collection expenses and lower
OREO expenses.
- Income Tax Benefit – The
calculation for the income tax provision or benefit generally does
not consider the tax effects of changes in other comprehensive
income, or OCI, which is a component of stockholders’ equity on the
balance sheet. However, an exception is provided in certain
circumstances, such as when there is a full valuation allowance
against net deferred tax assets, there is a loss from continuing
operations and income in other components of the financial
statements. In such a case, pre-tax income from other categories,
such as changes in OCI, must be considered in determining a tax
benefit to be allocated to the loss from continuing operations. Our
June 30, 2014 tax benefit is entirely due to gains in other
comprehensive income that are presented in current operations in
accordance with applicable accounting standards.
- Capital – At June 30, 2014, PBI
Bank’s Tier 1 leverage ratio was 6.51% compared with 6.36% at March
31, 2014, and its Total risk-based capital ratio was 11.79% at June
30, 2014 compared with 11.50% at March 31, 2014, which are below
the minimums of 9.0% and 12.0% required by the Bank’s Consent
Order. At June 30, 2014, Porter Bancorp’s leverage ratio was 4.89%
compared with 4.87% at March 31, 2014, and its Total risk-based
capital ratio was 11.07%, compared with 10.93% at March 31,
2014.
Management and the Board of Directors
continue to evaluate appropriate strategies for increasing the
Company’s capital in order to meet the capital requirements of the
Consent Order. These include, among other things, a possible public
offering or private placement of common stock to new and existing
shareholders. As previously announced, the Company has engaged a
financial advisor to assist the Board of Directors in this
evaluation.
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. The words “believe,”
“may,” “should,” “anticipate,” “estimate,” “expect,” “intend,”
“objective,” “possible,” “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 indicated by forward-looking
statements due to various risks and uncertainties, including our
ability to reduce our level of higher risk loans such as commercial
real estate and real estate development loans, reduce our level of
non-performing loans and other real estate owned, and increase net
interest income in a low interest rate environment, as well as our
need to increase capital. These and other risks and uncertainties
are described in greater detail 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 second
quarter ending June 30, 2014 follows.
PORTER BANCORP, INC.Unaudited
Financial Information(in thousands, except share and per share
data)
Three Three Three Six Six
Months Months Months Months Months Ended Ended Ended Ended Ended
6/30/14 3/31/14 6/30/13 6/30/14 6/30/13
Income Statement Data Interest income $ 10,166 $ 9,897 $
11,168 $ 20,063 $ 22,426 Interest expense 2,552
2,597 2,816 5,149
5,776
Net interest income 7,614 7,300 8,352 14,914 16,650 Provision for
loan losses — — —
— 450
Net interest income after provision 7,614 7,300 8,352 14,914 16,200
Service charges on deposit accounts 487 468 506 955 999
Income from fiduciary activities — — — — 517 Bank card interchange
fees 205 161 196 366 368 Other real estate owned income 18 7 230 25
342 Gains (losses) on sales of securities, net 2 44 703 46 703
Income from bank owned life insurance 62 76 305 138 384 Other
175 159 208 334
482
Non-interest income 949 915 2,148 1,864 3,795 Salaries &
employee benefits 3,949 3,741 3,999 7,690 8,138 Occupancy and
equipment 896 892 913 1,788 1,844 Other real estate owned expense
774 662 1,657 1,436 2,448 FDIC insurance 571 540 650 1,111 1,289
Franchise tax 405 425 537 830 1,074 Loan collection expense 389 539
2,407 928 3,442 Professional fees 764 558 499 1,322 905
Communications expense 165 235 179 400 354 Postage and delivery 94
110 102 204 215 Insurance expense 153 149 160 302 311 Other
784 651 706 1,435
1,353
Non-interest expense 8,944 8,502 11,809 17,446 21,373 Income
(loss) before income taxes (381 ) (287 ) (1,309 ) (668 ) (1,378 )
Income tax expense (benefit) (424 ) — —
(424 ) —
Net income (loss) 43 (287 ) (1,309 ) (244 ) (1,378 ) Less:
Dividends on preferred stock 789 786 437 1,574 875 Accretion on
preferred stock — — 45 — 90 Earnings allocated to participating
securities (74 ) (97 ) (110 ) (173 )
(131 ) Net income (loss) attributable to common $
(672 ) $ (976 ) $ (1,681 ) $ (1,645 ) $ (2,212 )
Weighted average shares – Basic 11,981,121 12,021,313
11,761,788 11,992,925 11,801,663 Weighted average shares – Diluted
11,981,121 12,021,313 11,761,788 11,992,925 11,801,663 Basic
earnings (loss) per common share $ (0.06 ) $ (0.08 ) $ (0.14 ) $
(0.14 ) $ (0.19 ) Diluted earnings (loss) per common share $ (0.06
) $ (0.08 ) $ (0.14 ) $ (0.14 ) $ (0.19 ) Cash dividends declared
per common share $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
PORTER BANCORP, INC.Unaudited
Financial Information(in thousands, except share and per share
data)
Three Three Three Six Six
Months Months Months Months Months Ended Ended Ended Ended Ended
6/30/14 3/31/14 6/30/13 6/30/14 6/30/13
Average Balance Sheet Data Assets $ 1,056,888 $ 1,073,586 $
1,104,807 $ 1,065,191 $ 1,128,182 Loans 677,643 698,184 806,941
687,857 839,542 Earning assets 991,416 1,019,173 1,050,515
1,005,218 1,080,824 Deposits 966,164 984,169 1,008,102 975,117
1,030,867 Long-term debt and advances 35,372 35,233 36,652 35,303
36,909 Interest bearing liabilities 893,921 911,186 941,059 902,506
962,153 Stockholders’ equity 37,690 36,992 46,904 37,343 47,324
Performance Ratios Return on average assets
0.02 % (0.11 )% (0.48 )% (0.05 )% (0.25 )% Return on average equity
0.46 (3.15 ) (11.19 ) (1.32 ) (5.87 ) Yield on average earning
assets (tax equivalent) 4.16 3.99 4.31 4.08 4.23 Cost of interest
bearing liabilities 1.15 1.16 1.20 1.15 1.21 Net interest margin
(tax equivalent) 3.13 2.96 3.24 3.04 3.15 Efficiency ratio 104.47
104.05 120.54 104.27 108.26
Loan Charge-off
Data Loans charged-off $ (3,130 ) $ (3,082 ) $ (3,404 ) $
(6,212 ) $ (21,366 ) Recoveries 1,741 373
1,124 2,114 1,795
Net charge-offs $ (1,389 ) $ (2,709 ) $ (2,280 ) $ (4,098 ) $
(19,571 )
Nonaccrual Loan Activity Nonaccrual
loans at beginning of period $ 77,344 $ 101,767 $ 120,943 $ 101,767
$ 94,517 Net principal pay-downs (12,195 ) (10,245 ) (8,118 )
(22,440 ) (12,223 ) Charge-offs (2,932 ) (2,472 ) (3,256 ) (5,404 )
(20,728 ) Loans foreclosed and transferred to OREO (18,524 )
(16,895 ) (11,875 ) (35,419 ) (15,523 ) Loans returned to accrual
status (2,362 ) (870 ) (421 ) (3,232 ) (421 ) Loans placed on
nonaccrual during the period 3,044 6,059
14,912 9,103 66,563
Nonaccrual loans at end of period $ 44,375 $ 77,344
$ 112,185 $ 44,375 $ 112,185
Troubled Debt Restructurings (TDRs) Accruing $ 32,389
$ 41,813 $ 54,927 $ 32,389 $ 54,927 Nonaccrual 18,500
30,640 46,510 18,500
46,510 Total $ 50,889 $ 72,453 $ 101,437 $ 50,889 $
101,437
Other Real Estate Owned (OREO) Activity (Net of
Allowance) OREO at beginning of period $ 45,918 $ 30,892 $
44,192 $ 30,892 $ 43,671 Real estate acquired 19,569 17,351 11,875
36,920 15,555 Valuation adjustment write-downs (400 ) (250 ) (977 )
(650 ) (1,284 ) Proceeds from sales of properties (2,206 ) (2,075 )
(7,898 ) (4,281 ) (10,553 ) Gain (loss) on sales, net 54
— (162 ) 54 (359 )
OREO at end of period $ 62,935 $ 45,918 $ 47,030
$ 62,935 $ 47,030
PORTER BANCORP, INC.Unaudited
Financial Information(in thousands, except share and per share
data)
As of As of As of As of 6/30/14
3/31/14 12/31/13 6/30/13
Assets Loans $ 643,030 $ 682,591 $
709,326 $ 774,785 Loan loss reserve (24,026 ) (25,415
) (28,124 ) (37,559 )
Net loans 619,004 657,176 681,202 737,226 Mortgage loans held for
sale 280 — 149 133 Securities held to maturity 43,488 43,550 43,612
— Securities available for sale 180,723 166,442 163,344 176,942
Federal funds sold & interest bearing deposits 95,353 99,286
103,669 56,512 Cash and due from financial institutions 6,913 7,449
7,465 7,754 Premises and equipment 19,788 19,821 19,983 20,368 FHLB
Stock 7,323 7,323 10,072 10,072 Other real estate owned 62,935
45,918 30,892 47,030 Accrued interest receivable and other assets
16,220 16,565 15,733
16,094
Total Assets $ 1,052,027 $ 1,063,530 $
1,076,121 $ 1,072,131
Liabilities and Equity Certificates of deposit $ 631,110 $
656,475 $ 679,952 $ 690,557 Interest checking 76,625 79,689 84,626
78,218 Money market 95,946 89,678 79,349 65,620 Savings
37,178 38,524 36,292
40,121
Total interest bearing deposits 840,859 864,366 880,219 874,516
Demand deposits 109,956 110,507
107,486 106,320
Total deposits 950,815 974,873 987,705 980,836 Federal funds
purchased & repurchase agreements 2,451 2,240 2,470 3,292 FHLB
advances 14,134 4,345 4,492 5,016 Junior subordinated debentures
30,400 30,625 30,850 31,525 Accrued interest payable and other
liabilities 16,453 15,110 14,673
12,710
Total liabilities 1,014,253 1,027,193 1,040,190 1,033,379
Stockholders’ equity 37,774 36,337
35,931 38,752
Total Liabilities and Stockholders’ Equity $ 1,052,027
$ 1,063,530 $ 1,076,121 $ 1,072,131
Ending shares outstanding 13,104,853 12,894,741
12,840,999 12,322,207
Book value per common share $ (0.04 )
$ (0.15 ) $ (0.18 ) $ 0.04
Tangible book value per common
share (0.13 ) (0.25 ) (0.29 ) (0.10 )
Asset Quality
Data Loan 90 days or more past due still on accrual $ — $ — $
232 $ 71 Nonaccrual loans 44,375 77,344
101,767 112,185 Total non-performing
loans 44,375 77,344 101,999 112,256 Real estate acquired through
foreclosures 62,935 45,918 30,892 47,030 Other repossessed assets
— — — —
Total non-performing assets $ 107,310 $ 123,262 $
132,891 $ 159,286
Non-performing loans to total loans 6.90 % 11.33 % 14.38 % 14.49 %
Non-performing assets to total assets 10.20 11.59 12.35 14.86
Allowance for loan losses to non-performing loans 54.14 32.86 27.57
33.46 Allowance as % of loans evaluated individually 2.20 2.01 2.32
5.82 Allowance as % of loans evaluated collectively 3.95 4.10 4.41
4.56 Allowance for loan losses to total loans 3.74 3.72 3.96 4.85
Risk-based Capital Ratios Tier I leverage ratio 4.89
% 4.87 % 4.95 % 4.91 % Tier I risk-based capital ratio 7.31 7.22
7.34 6.88 Total risk-based capital ratio 11.07 10.93 11.03 10.46
FTE employees 275 263 260 264
Porter Bancorp, Inc.John T. Taylor, President, 502-499-4800
Porter Bancorp, Inc. (delisted) (NASDAQ:PBIB)
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