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LOUISVILLE, Ky., Jul 15, 2009 (BUSINESS WIRE) -- Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, with 19 full-service banking offices in 11 counties in Kentucky, today reported results for the second quarter of 2009.
The Company reported net income of $3.2 million, or $0.33 per fully diluted common share, for the second quarter of 2009, compared with $4.0 million, or $0.48 per fully diluted common share, for the second quarter of 2008. Earnings for the six months ended June 30, 2009, were $6.3 million, or $0.64 per fully diluted common share, compared with $7.6 million, or $0.91 per fully diluted common share. The 2009 earnings per common share results included reductions of $481,000 and $963,000 for preferred stock dividends and accretion on the preferred stock for the second quarter and six month period, respectively. No comparable dividends were paid in the 2008 periods.
"Porter Bancorp reported growth in earnings and margins in the second quarter of 2009 compared with the first quarter of 2009," stated Maria L. Bouvette, President and CEO of Porter Bancorp. "We also reported an improvement in asset quality over the first quarter as evidenced by an 18.3% drop in non-performing assets. In addition, we increased our reserves to 1.52% of loans at June 30, 2009, in light of the continued weakness in the economy and as part of our strategy to protect our capital base. Porter Bancorp continues to maintain its 'well-capitalized' position, the highest regulatory rating. Our total risk-based capital ratio of 13.9% for the holding company remains significantly above the 10.0% requirement for a well-capitalized institution.
"Our net interest income rose 7.0% to $12.8 million in the second quarter of 2009 compared with the second quarter of 2008 and benefited from the continued growth in earning assets," continued Ms. Bouvette. "Although we reported solid growth in net income since the first quarter of 2009, Porter Bancorp's net income of $3.2 million in the second quarter of 2009 was below last year's level of $4.0 million due to a higher provision for loan losses and a significant increase in FDIC premiums and assessment fees. Our provision for loan losses rose $850,000 and FDIC premiums and assessments were up $1.0 million compared with the second quarter of 2008."
Second Quarter Results
Net Interest Income
Net interest income increased 7.0% to $12.8 million for the three months ended June 30, 2009, an increase of $841,000, compared with $12.0 million for the same period in 2008. Net interest income rose 6.3% to $24.8 million for the six months ended June 30, 2009, an increase of $1.5 million, compared with $23.3 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 11 basis points to 3.13% from 3.02% in the first quarter of 2009 due primarily to a lower cost of funds. The yield on earning assets declined 17 basis points from the first quarter of 2009 compared with a 31 basis point decline in rates paid on interest-bearing liabilities. Net interest margin decreased 16 basis points to 3.13% in the second quarter of 2009 from our margin of 3.29% in the second quarter of 2008 due primarily to earning assets repricing downward more quickly in the falling rate environment than cost of funds. The yield on earning assets declined 111 basis points from the 2008 second quarter, compared with a 96 basis point decline in rates paid on interest-bearing liabilities.
Average earning assets rose 12.4% to $1.7 billion for the three months ended June 30, 2009, compared with the $1.5 billion for the three months ended June 30, 2008. Average deposits increased 12.1% to $1.4 billion, up from $1.2 billion for the three months ended June 30, 2008. "We expect continued expansion in our margin next quarter since we are asset sensitive and our expectation of continued downward liability repricing with limited repricing of assets," noted Ms. Bouvette.
Non-Interest Income
Non-interest income increased 6.0%, or $107,000, for the second quarter of 2009, compared with the second quarter of 2008. Non-interest income increased 27.5%, or $409,000, for the second quarter of 2009 compared with the linked first quarter of 2009. The increase in non-interest income was due to gains on sales of loans originated for sale, which were partially offset by lower service charges on deposit accounts and lower income from fiduciary activities. Our subsidiary, 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. In addition, the loss on sales of securities experienced in the 2008 second quarter was not repeated in the 2009 second quarter.
Non-Interest Expense
Non-interest expense for the second quarter increased 16.8% from prior year second quarter. This was due primarily to increased FDIC insurance premiums which have risen significantly due to amendments made by the FDIC in 2007 to its risk-based deposit premium assessment system and to a one-time special assessment of $781,000 assessed in the 2009 second quarter and payable September 30, 2009. This special assessment increased our second quarter efficiency ratio 531 basis points to 55.94%. Without this special assessment, our second quarter efficiency ratio would have been 50.63%, an improvement from our ratio of 54.09% in the 2009 first quarter, and from our ratio of 50.70% in the 2008 second quarter.
Balance Sheet Review
Total assets increased 8.1%, or $128.3 million, to $1.7 billion at June 30, 2009, from $1.6 billion at June 30, 2008. The Company's loan portfolio increased 1.4%, or $18.8 million, to $1.36 billion from $1.34 billion at June 30, 2008, primarily due to in-house loan origination efforts. Deposits at June 30, 2009 increased 7.6% to $1.4 billion from $1.3 billion at June 30, 2008, primarily due to an increase in both time deposits and transactional accounts from promotional efforts throughout the period. "Our loan growth slowed in the second quarter due to a general slowdown in economic activity in our markets," noted Ms. Bouvette.
Asset Quality
Non-performing loans decreased to $19.3 million, or 1.42% of total loans, at June 30, 2009, compared with $24.8 million, or 1.81% of total loans, at March 31, 2009, and increased in comparison with $12.9 million, or 0.96% of total loans, at June 30, 2008. Foreclosed properties at June 30, 2009, were $9.6 million, compared with $10.5 million at March 31, 2009, and $6.6 million at June 30, 2008. Our ratio of non-performing assets to total assets decreased during the quarter to 1.69% at June 30, 2009, compared with 2.04% at March 31, 2009.
Our loan loss reserve as a percentage of total loans increased to 1.52% at June 30, 2009, compared with 1.35% at June 30, 2008. Net loan charge-offs for the second quarter of 2009 were $1.2 million, or 0.09% of average loans for the quarter.
"We remain focused on reducing our non-performing loans and foreclosed real estate to improve our credit quality, minimize losses and protect our capital base," stated Ms. Bouvette. "Our improvement was due to normal progression of troubled loans through workout, collateral repossession and ultimate disposition. We continue to be proactive in managing Porter Bancorp in this challenging economic environment and believe our strengthened allowance for loan losses and strong capital base will be important buffers to possible further declines 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 second quarter ending June 30, 2009 follows.
PORTER BANCORP, INC. AND SUBSIDIARY | ||||||||||||||||
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 | ||||||||||||
| 6/30/09 | 3/31/09 | 6/30/08 | 6/30/09 | 6/30/08 | ||||||||||||
| Income Statement Data | ||||||||||||||||
| Interest income | $ | 23,645 | $ | 23,502 | $ | 25,041 | $ | 47,147 | $ | 50,715 | ||||||
| Interest expense | 10,832 | 11,535 | 13,069 | 22,367 | 27,400 | |||||||||||
| Net interest income | 12,813 | 11,967 | 11,972 | 24,780 | 23,315 | |||||||||||
| Provision for loan losses | 1,600 | 1,600 | 750 | 3,200 | 1,400 | |||||||||||
| Net interest income after provision | 11,213 | 10,367 | 11,222 | 21,580 | 21,915 | |||||||||||
| Service charges on deposit accounts | 788 | 688 | 902 | 1,476 | 1,731 | |||||||||||
| Income from fiduciary activities | 198 | 220 | 331 | 418 | 584 | |||||||||||
| Gains on sales of loans originated for sale | 241 | - | - | 241 | - | |||||||||||
| Gains (losses) on sales of securities, net | - | 1 | (139 | ) | 1 | (45) | ||||||||||
| Other | 668 | 577 | 694 | 1,245 | 1,336 | |||||||||||
| Non-interest income | 1,895 | 1,486 | 1,788 | 3,381 | 3,606 | |||||||||||
| Salaries & employee benefits | 3,813 | 3,878 | 3,892 | 7,691 | 7,716 | |||||||||||
| Occupancy and equipment | 981 | 998 | 904 | 1,979 | 1,817 | |||||||||||
| FDIC insurance | 503 | 459 | 242 | 962 | 463 | |||||||||||
| FDIC special insurance assessment | 781 | - | - | 781 | - | |||||||||||
| Franchise tax | 450 | 450 | 435 | 900 | 870 | |||||||||||
| Professional fees | 203 | 228 | 172 | 431 | 418 | |||||||||||
| Postage and delivery | 184 | 184 | 192 | 368 | 367 | |||||||||||
| Communications expense | 230 | 155 | 188 | 385 | 349 | |||||||||||
| Advertising | 125 | 158 | 140 | 283 | 301 | |||||||||||
| Other real estate owned expense | 226 | 127 | 120 | 353 | 347 | |||||||||||
| Other | 732 | 639 | 762 | 1,371 | 1,516 | |||||||||||
| Non-interest expense | 8,228 | 7,276 | 7,047 | 15,504 | 14,164 | |||||||||||
| Income before income taxes | 4,880 | 4,577 | 5,963 | 9,457 | 11,357 | |||||||||||
| Income tax expense | 1,635 | 1,516 | 1,990 | 3,151 | 3,787 | |||||||||||
| Net income | 3,245 | 3,061 | 3,973 | 6,306 | 7,570 | |||||||||||
| Less: | ||||||||||||||||
| Dividends on preferred stock | 437 | 438 | - | 875 | - | |||||||||||
| Accretion on preferred stock | 44 | 44 | - | 88 | - | |||||||||||
| Net income available to common | $ | 2,764 | $ | 2,579 | $ | 3,973 | $ | 5,343 | $ | 7,570 | ||||||
| Weighted average shares - Basic | 8,338,008 | 8,294,504 | 8,283,916 | 8,316,376 | 8,279,178 | |||||||||||
| Weighted average shares - Diluted | 8,338,008 | 8,294,504 | 8,283,916 | 8,316,376 | 8,279,178 | |||||||||||
| Basic and diluted earnings per common share | $ | 0.33 | $ | 0.31 | $ | 0.48 | $ | 0.64 | $ | 0.91 | ||||||
| Cash dividends declared per common share | $ | 0.21 | $ | 0.21 | $ | 0.20 | $ | 0.42 | $ | 0.40 | ||||||
PORTER BANCORP, INC. AND SUBSIDIARY | ||||||||||||||||||||
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 | ||||||||||||||||
| 6/30/09 | 3/31/09 | 6/30/08 | 6/30/09 | 6/30/08 | ||||||||||||||||
| Average Balance Sheet Data | ||||||||||||||||||||
| Assets | $ | 1,734,866 | $ | 1,696,575 | $ | 1,563,635 | $ | 1,715,826 | $ | 1,538,440 | ||||||||||
| Loans | 1,360,191 | 1,360,193 | 1,326,996 | 1,360,192 | 1,298,407 | |||||||||||||||
| Earning assets | 1,659,389 | 1,621,569 | 1,475,812 | 1,640,583 | 1,454,928 | |||||||||||||||
| Deposits | 1,391,868 | 1,335,761 | 1,242,153 | 1,363,970 | 1,231,656 | |||||||||||||||
| Long-term debt and advances | 157,388 | 176,065 | 170,419 | 166,675 | 158,512 | |||||||||||||||
| Interest bearing liabilities | 1,456,778 | 1,422,584 | 1,334,128 | 1,439,776 | 1,311,140 | |||||||||||||||
| Stockholders' equity | 167,168 | 165,756 | 126,211 | 166,466 | 125,117 | |||||||||||||||
| Performance Ratios | ||||||||||||||||||||
| Return on average assets | 0.75 | % | 0.73 | % | 1.02 | % | 0.74 | % | 0.99 | % | ||||||||||
| Return on average equity | 7.79 | 7.49 | 12.66 | 7.64 | 12.17 | |||||||||||||||
| Yield on average earning assets (tax equivalent) | 5.74 | 5.91 | 6.85 | 5.82 | 7.04 | |||||||||||||||
| Cost of interest bearing liabilities | 2.98 | 3.29 | 3.94 | 3.13 | 4.20 | |||||||||||||||
| Net interest margin (tax equivalent) | 3.13 | 3.02 | 3.29 | 3.08 | 3.25 | |||||||||||||||
| Efficiency ratio | 55.94 | 54.09 | 50.70 | 55.06 | 52.53 | |||||||||||||||
| Loan Charge-off Data | ||||||||||||||||||||
| Loans charged-off | $ | (1,300 | ) | $ | (983 | ) | $ | (798 | ) | $ | (2,283 | ) | $ | (1,217 | ) | |||||
| Recoveries | 69 | 102 | 114 | 171 | 188 | |||||||||||||||
| Net charge-offs | $ | (1,231 | ) | $ | (881 | ) | $ | (684 | ) | $ | (2,112 | ) | $ | (1,029 | ) | |||||
PORTER BANCORP, INC. AND SUBSIDIARY | ||||||||||||||||
Unaudited Financial Information | ||||||||||||||||
|
(in thousands, except share and per share data) | ||||||||||||||||
| As of | As of | As of | As of | |||||||||||||
| 6/30/09 | 3/31/09 | 12/31/08 | 6/30/08 | |||||||||||||
| Assets | ||||||||||||||||
| Loans | $ | 1,362,059 | $ | 1,369,087 | $ | 1,350,106 | $ | 1,343,216 | ||||||||
| Loan loss reserve | (20,740 | ) | (20,371 | ) | (19,652 | ) | (18,133 | ) | ||||||||
| Net loans | 1,341,319 | 1,348,716 | 1,330,454 | 1,325,083 | ||||||||||||
| Securities available for sale | 178,161 | 174,260 | 173,077 | 105,901 | ||||||||||||
| Federal funds sold & interest bearing deposits | 79,284 | 72,766 | 38,189 | 28,970 | ||||||||||||
| Cash and due from financial institutions | 17,844 | 49,873 | 14,957 | 31,870 | ||||||||||||
| Premises and equipment | 23,412 | 22,396 | 22,543 | 22,988 | ||||||||||||
| Goodwill | 23,794 | 23,794 | 23,794 | 23,877 | ||||||||||||
| Accrued interest receivable and other assets | 45,994 | 46,588 | 44,843 | 42,861 | ||||||||||||
| Total Assets | $ | 1,709,808 | $ | 1,738,393 | $ | 1,647,857 | $ | 1,581,550 | ||||||||
| Liabilities and Equity | ||||||||||||||||
| Certificates of deposit | $ | 1,074,819 | $ | 1,078,007 | $ | 1,012,851 | $ | 960,002 | ||||||||
| Interest checking | 71,864 | 79,831 | 76,962 | 103,719 | ||||||||||||
| Money market | 90,962 | 84,379 | 72,543 | 71,925 | ||||||||||||
| Savings | 34,917 | 36,958 | 33,253 | 35,747 | ||||||||||||
| Total interest bearing deposits | 1,272,562 | 1,279,175 | 1,195,609 | 1,171,393 | ||||||||||||
| Demand deposits | 91,630 | 111,778 | 92,940 | 96,536 | ||||||||||||
| Total deposits | 1,364,192 | 1,390,953 | 1,288,549 | 1,267,929 | ||||||||||||
| Federal funds purchased & repurchase agreements | 11,232 | 12,534 | 10,084 | 10,753 | ||||||||||||
| FHLB advances | 126,350 | 127,192 | 142,776 | 145,098 | ||||||||||||
| Junior subordinated debentures | 34,000 | 34,000 | 34,000 | 25,000 | ||||||||||||
| Accrued interest payable and other liabilities | 7,891 | 8,493 | 8,235 | 7,322 | ||||||||||||
| Total liabilities | 1,543,665 | 1,573,172 | 1,483,644 | 1,456,102 | ||||||||||||
| Stockholders' equity | 166,143 | 165,221 | 164,213 | 125,448 | ||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 1,709,808 | $ | 1,738,393 | $ | 1,647,857 | $ | 1,581,550 | ||||||||
| Ending shares outstanding | 8,339,617 | 8,337,217 | 8,287,933 | 8,288,487 | ||||||||||||
| Book value per common share | $ | 15.73 | $ | 15.62 | $ | 15.59 | $ | 15.14 | ||||||||
| Tangible book value per common share | 12.52 | 12.38 | 12.33 | 11.93 | ||||||||||||
| Asset Quality Data | ||||||||||||||||
| Loan 90 days or more past due still on accrual | $ | 8,405 | $ | 10,002 | $ | 11,598 | $ | 4,974 | ||||||||
| Non-accrual loans | 10,872 | 14,802 | 9,725 | 7,917 | ||||||||||||
| Total non-performing loans | 19,277 | 24,804 | 21,323 | 12,891 | ||||||||||||
| Real estate acquired through foreclosures | 9,551 | 10,470 | 7,839 | 6,625 | ||||||||||||
| Other repossessed assets | 80 | 117 | 96 | 57 | ||||||||||||
| Total non-performing assets | $ | 28,908 | $ | 35,391 | $ | 29,258 | $ | 19,573 | ||||||||
| Non-performing loans to total loans | 1.42 | % | 1.81 | % | 1.58 | % | 0.96 | % | ||||||||
| Non-performing assets to total assets | 1.69 | 2.04 | 1.78 | 1.24 | ||||||||||||
| Allowance for loan losses to non-performing loans | 107.59 | 82.13 | 92.16 | 140.66 | ||||||||||||
| Allowance for loan losses to total loans | 1.52 | 1.49 | 1.46 | 1.35 | ||||||||||||
| Risk-based Capital Ratios | ||||||||||||||||
| Tier I leverage ratio | 9.62 | % | 9.76 | % | 10.10 | % | 8.03 | % | ||||||||
| Tier I risk-based capital ratio | 11.98 | 12.00 | 12.13 | 9.34 | ||||||||||||
| Total risk-based capital ratio | 13.89 | 13.91 | 14.05 | 10.59 | ||||||||||||
| FTE employees | 278 | 275 | 276 | 280 | ||||||||||||
SOURCE: Porter Bancorp, Inc.
Porter Bancorp, Inc.
Maria L. Bouvette, President and CEO, 502-499-4800
Copyright Business Wire 2009