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LOUISVILLE, Ky., Oct 15, 2009 (BUSINESS WIRE) -- Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, with 18 full-service banking offices in 11 counties in Kentucky, today reported results for the third quarter of 2009.
The Company reported net income of $4.5 million, or $0.49 per fully diluted common share, for the third quarter of 2009, compared with $4.1 million, or $0.50 per fully diluted common share, for the third quarter of 2008. Earnings for the nine months ended September 30, 2009, were $10.8 million, or $1.13 per fully diluted common share, compared with $11.7 million, or $1.41 per fully diluted common share, for the same period of 2008.
"Porter Bancorp reported growth in net interest income and net income in the third quarter of 2009 compared with the second quarter of 2009," stated Maria L. Bouvette, President and CEO of Porter Bancorp. "We benefited from an increase in our net interest margin, higher non-interest income and lower expenses compared with the second quarter. Our increased profitability was also highlighted by an improvement in our efficiency ratio to 47.14%, our best result in eight quarters.
"We remained focused on our asset quality due to the soft economy and strengthened our allowance for loan losses to 1.58% at the end of the third quarter," continued Ms. Bouvette. "We continued building our reserves 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 13.8% for the holding company remains significantly above the 10.0% requirement for a well-capitalized institution."
Third Quarter Results
Net Interest Income
Net interest income increased 15.6% to $14.4 million for the three months ended September 30, 2009, an increase of $1.9 million, compared with $12.4 million for the same period in 2008. Net interest income rose 9.5% to $39.2 million for the nine months ended September 30, 2009, an increase of $3.4 million, compared with $35.7 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 46 basis points to 3.59% from 3.13% in the second quarter of 2009 due primarily to lower cost of funds. The yield on earning assets increased 19 basis points from the second quarter of 2009 and rates paid on interest-bearing liabilities decreased 31 basis points. Net interest margin increased 26 basis points to 3.59% in the third quarter of 2009 from our margin of 3.33% in the third quarter of 2008 due primarily to lower cost of funds. The yield on earning assets declined 77 basis points from the 2008 third quarter, compared with a 105 basis point decline in rates paid on interest-bearing liabilities.
Average earning assets rose 6.8% to $1.6 billion for the three months ended September 30, 2009, compared with the $1.5 billion for the three months ended September 30, 2008. Average deposits increased 9.4% to $1.4 billion, up from $1.3 billion for the three months ended September 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 18.0%, or $311,000, to $2.0 million for the third quarter of 2009, compared with the third quarter of 2008. The increase in non-interest income was due to gains on sales of securities and 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. Loans sold generated $82,000 in income in the third quarter of 2009 and $323,000 for the first nine months of 2009. The Bank retained servicing rights for the sold loans.
Non-Interest Expense
Non-interest expense for the third quarter increased 12.0% from the prior year third quarter. This was due primarily to increased FDIC insurance premiums. FDIC insurance premiums have risen significantly due to amendments made by the FDIC in 2007 to its risk-based deposit premium assessment system. FDIC premiums more than doubled to $626,000 in the third quarter of 2009 from $284,000 in the third quarter of 2008. Our efficiency ratio continues to outperform our peers at 47.14% for the third quarter of 2009 and improved from 47.47% in the third quarter of 2008.
Balance Sheet Review
Total assets increased 8.3%, or $132.6 million, to $1.7 billion at September 30, 2009, from $1.6 billion at September 30, 2008. The Company's loan portfolio increased 3.3%, or $44.9 million, to $1.39 billion from $1.34 billion at September 30, 2008, primarily due to in-house loan origination efforts. Deposits at September 30, 2009, increased 8.4% to $1.4 billion from $1.3 billion at September 30, 2008, primarily due to an increase in both time deposits and transactional accounts from promotional efforts throughout the period.
Asset Quality
Non-performing loans increased to $26.3 million, or 1.89% of total loans, at September 30, 2009, compared with $19.3 million, or 1.42% of total loans, at June 30, 2009, and increased in comparison with $15.4 million, or 1.15% of total loans, at September 30, 2008. Foreclosed properties at September 30, 2009, were $12.9 million, compared with $9.6 million at June 30, 2009, and $7.5 million at September 30, 2008. Our ratio of non-performing assets to total assets increased during the quarter to 2.27% at September 30, 2009, compared with 1.69% at June 30, 2009.
Our loan loss reserve as a percentage of total loans increased to 1.58% at September 30, 2009, compared with 1.39% at September 30, 2008. Net loan charge-offs for the third quarter of 2009 were $782,000, or 0.06% of average loans for the quarter.
"The majority of the increase in non-performing loans is attributable to residential real estate construction and development loans that have been affected by the weak economy," stated Ms. Bouvette. "We have increased our reserves to account for these loans and remain very proactive in working through problem loans to minimize future losses. We believe that our strengthened allowance for loan losses and strong capital base will be important buffers against possible continued weakness 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 third quarter ending September 30, 2009 follows.
PORTER BANCORP, INC. AND SUBSIDIARY Unaudited Financial Information (in thousands, except share and per share data) | |||||||||||||||
| Three | Three | Three | Nine | Nine | |||||||||||
| Months | Months | Months | Months | Months | |||||||||||
| Ended | Ended | Ended | Ended | Ended | |||||||||||
| 9/30/09 | 6/30/09 | 9/30/08 | 9/30/09 | 9/30/08 | |||||||||||
| Income Statement Data | |||||||||||||||
| Interest income | $ | 23,802 | $ | 23,645 | $ | 25,106 | $ | 70,949 | $ | 75,821 | |||||
| Interest expense | 9,428 | 10,832 | 12,673 | 31,795 | 40,073 | ||||||||||
| Net interest income | 14,374 | 12,813 | 12,433 | 39,154 | 35,748 | ||||||||||
| Provision for loan losses | 2,000 | 1,600 | 1,250 | 5,200 | 2,650 | ||||||||||
| Net interest income after provision | 12,374 | 11,213 | 11,183 | 33,954 | 33,098 | ||||||||||
| Service charges on deposit accounts | 843 | 788 | 876 | 2,319 | 2,607 | ||||||||||
| Income from fiduciary activities | 227 | 198 | 261 | 645 | 845 | ||||||||||
| Gains on sales of loans originated for sale | 82 | 241 | - | 323 | - | ||||||||||
| Gains (losses) on sales of securities, net | 321 | - | (101 | ) | 322 | (146) | |||||||||
| Other | 563 | 668 | 689 | 1,808 | 2,025 | ||||||||||
| Non-interest income | 2,036 | 1,895 | 1,725 | 5,417 | 5,331 | ||||||||||
| Salaries & employee benefits | 3,799 | 3,813 | 3,666 | 11,490 | 11,382 | ||||||||||
| Occupancy and equipment | 993 | 981 | 882 | 2,972 | 2,699 | ||||||||||
| FDIC insurance | 626 | 503 | 284 | 1,588 | 747 | ||||||||||
| FDIC special insurance assessment | - | 781 | - | 781 | - | ||||||||||
| Franchise tax | 450 | 450 | 435 | 1,350 | 1,305 | ||||||||||
| Other real estate owned expense | 353 | 226 | 109 | 706 | 456 | ||||||||||
| Professional fees | 175 | 203 | 177 | 606 | 595 | ||||||||||
| Communications expense | 183 | 230 | 181 | 568 | 530 | ||||||||||
| Postage and delivery | 193 | 184 | 201 | 561 | 568 | ||||||||||
| Advertising | 121 | 125 | 100 | 404 | 401 | ||||||||||
| Other | 691 | 732 | 734 | 2,062 | 2,250 | ||||||||||
| Non-interest expense | 7,584 | 8,228 | 6,769 | 23,088 | 20,933 | ||||||||||
| Income before income taxes | 6,826 | 4,880 | 6,139 | 16,283 | 17,496 | ||||||||||
| Income tax expense | 2,290 | 1,635 | 2,039 | 5,441 | 5,826 | ||||||||||
| Net income | 4,536 | 3,245 | 4,100 | 10,842 | 11,670 | ||||||||||
| Less: | |||||||||||||||
| Dividends on preferred stock | 437 | 437 | - | 1,312 | - | ||||||||||
| Accretion on preferred stock | 44 | 44 | - | 132 | - | ||||||||||
| Net income available to common | $ | 4,055 | $ | 2,764 | $ | 4,100 | $ | 9,398 | $ | 11,670 | |||||
| Weighted average common shares - Basic | 8,339,323 | 8,338,008 | 8,288,200 | 8,324,109 | 8,282,214 | ||||||||||
| Weighted average common shares - Diluted | 8,339,323 | 8,338,008 | 8,288,200 | 8,324,109 | 8,282,214 | ||||||||||
| Basic and diluted earnings per common share | $ | 0.49 | $ | 0.33 | $ | 0.50 | $ | 1.13 | $ | 1.41 | |||||
| Cash dividends declared per common share | $ | 0.21 | $ | 0.21 | $ | 0.20 | $ | 0.63 | $ | 0.60 | |||||
PORTER BANCORP, INC. AND SUBSIDIARY Unaudited Financial Information (in thousands, except share and per share data) | |||||||||||||||
| Three | Three | Three | Nine | Nine | |||||||||||
| Months | Months | Months | Months | Months | |||||||||||
| Ended | Ended | Ended | Ended | Ended | |||||||||||
| 9/30/09 | 6/30/09 | 9/30/08 | 9/30/09 | 9/30/08 | |||||||||||
| Average Balance Sheet Data | |||||||||||||||
| Assets | $ | 1,674,703 | $ | 1,734,866 | $ | 1,582,701 | $ | 1,701,967 | $ | 1,553,301 | |||||
| Loans | 1,368,970 | 1,360,191 | 1,351,897 | 1,363,150 | 1,316,367 | ||||||||||
| Earning assets | 1,599,943 | 1,659,389 | 1,498,361 | 1,626,887 | 1,469,511 | ||||||||||
| Deposits | 1,373,626 | 1,391,868 | 1,255,778 | 1,367,224 | 1,239,755 | ||||||||||
| Long-term debt and advances | 112,425 | 157,388 | 178,442 | 148,393 | 165,204 | ||||||||||
| Interest bearing liabilities | 1,401,791 | 1,456,778 | 1,353,983 | 1,426,975 | 1,325,525 | ||||||||||
| Stockholders' equity | 168,561 | 167,168 | 128,080 | 167,172 | 126,112 | ||||||||||
| Performance Ratios | |||||||||||||||
| Return on average assets | 1.07 | % | 0.75 | % | 1.03 | % | 0.85 | % | 1.00 | % | |||||
| Return on average equity | 10.68 | 7.79 | 12.73 | 8.67 | 12.36 | ||||||||||
| Yield on average earning assets (tax equivalent) | 5.93 | 5.74 | 6.70 | 5.86 | 6.92 | ||||||||||
| Cost of interest bearing liabilities | 2.67 | 2.98 | 3.72 | 2.98 | 4.04 | ||||||||||
| Net interest margin (tax equivalent) | 3.59 | 3.13 | 3.33 | 3.25 | 3.28 | ||||||||||
| Efficiency ratio | 47.14 | 55.94 | 47.47 | 52.18 | 50.78 | ||||||||||
| Loan Charge-off Data | |||||||||||||||
| Loans charged-off | $ | (829 | ) | $ | (1,300 | ) | $ | (782 | ) | $ | (3,112 | ) | $ | (1,999 | ) |
| Recoveries | 47 | 69 | 37 | 218 | 225 | ||||||||||
| Net charge-offs | $ | (782 | ) | $ | (1,231 | ) | $ | (745 | ) | $ | (2,894 | ) | $ | (1,774 | ) |
PORTER BANCORP, INC. AND SUBSIDIARY Unaudited Financial Information (in thousands, except share and per share data) | ||||||||||||
| As of | As of | As of | As of | |||||||||
| 9/30/09 | 6/30/09 | 12/31/08 | 9/30/08 | |||||||||
| Assets | ||||||||||||
| Loans | $ | 1,387,359 | $ | 1,362,059 | $ | 1,350,106 | $ | 1,342,467 | ||||
| Loan loss reserve | (21,958 | ) | (20,740 | ) | (19,652 | ) | (18,638 | ) | ||||
| Net loans | 1,365,401 | 1,341,319 | 1,330,454 | 1,323,829 | ||||||||
| Securities available for sale | 175,160 | 178,161 | 173,077 | 109,799 | ||||||||
| Federal funds sold & interest bearing deposits | 74,232 | 79,284 | 38,189 | 30,172 | ||||||||
| Cash and due from financial institutions | 17,610 | 17,844 | 14,957 | 41,943 | ||||||||
| Premises and equipment | 23,756 | 23,412 | 22,543 | 22,986 | ||||||||
| Goodwill | 23,794 | 23,794 | 23,794 | 23,891 | ||||||||
| Accrued interest receivable and other assets | 48,809 | 45,994 | 44,843 | 43,572 | ||||||||
| Total Assets | $ | 1,728,762 | $ | 1,709,808 | $ | 1,647,857 | $ | 1,596,192 | ||||
| Liabilities and Equity | ||||||||||||
| Certificates of deposit | $ | 1,099,402 | $ | 1,074,819 | $ | 1,012,851 | $ | 987,464 | ||||
| Interest checking | 72,472 | 71,864 | 76,962 | 80,009 | ||||||||
| Money market | 80,471 | 90,962 | 72,543 | 82,179 | ||||||||
| Savings | 33,450 | 34,917 | 33,253 | 34,684 | ||||||||
| Total interest bearing deposits | 1,285,795 | 1,272,562 | 1,195,609 | 1,184,336 | ||||||||
| Demand deposits | 92,861 | 91,630 | 92,940 | 87,603 | ||||||||
| Total deposits | 1,378,656 | 1,364,192 | 1,288,549 | 1,271,939 | ||||||||
| Federal funds purchased & repurchase agreements | 11,296 | 11,232 | 10,084 | 10,457 | ||||||||
| FHLB advances | 125,284 | 126,350 | 142,776 | 143,842 | ||||||||
| Junior subordinated debentures | 34,000 | 34,000 | 34,000 | 34,000 | ||||||||
| Accrued interest payable and other liabilities | 8,411 | 7,891 | 8,235 | 8,194 | ||||||||
| Total liabilities | 1,557,647 | 1,543,665 | 1,483,644 | 1,468,432 | ||||||||
| Stockholders' equity | 171,115 | 166,143 | 164,213 | 127,760 | ||||||||
| Total Liabilities and Stockholders' Equity | $ | 1,728,762 | $ | 1,709,808 | $ | 1,647,857 | $ | 1,596,192 | ||||
| Ending common shares outstanding | 8,339,102 | 8,339,617 | 8,287,933 | 8,287,794 | ||||||||
| Book value per common share | $ | 16.32 | $ | 15.73 | $ | 15.59 | $ | 15.42 | ||||
| Tangible book value per common share | 12.82 | 12.52 | 12.33 | 12.25 | ||||||||
| Asset Quality Data | ||||||||||||
| Loan 90 days or more past due still on accrual | $ | 9,896 | $ | 8,405 | $ | 11,598 | $ | 4,997 | ||||
| Non-accrual loans | 16,369 | 10,872 | 9,725 | 10,420 | ||||||||
| Total non-performing loans | 26,265 | 19,277 | 21,323 | 15,417 | ||||||||
| Real estate acquired through foreclosures | 12,934 | 9,551 | 7,839 | 7,521 | ||||||||
| Other repossessed assets | 77 | 80 | 96 | 96 | ||||||||
| Total non-performing assets | $ | 39,276 | $ | 28,908 | $ | 29,258 | $ | 23,034 | ||||
| Non-performing loans to total loans | 1.89 | % | 1.42 | % | 1.58 | % | 1.15 | % | ||||
| Non-performing assets to total assets | 2.27 | 1.69 | 1.78 | 1.44 | ||||||||
| Allowance for loan losses to non-performing loans | 83.60 | 107.59 | 92.16 | 120.89 | ||||||||
| Allowance for loan losses to total loans | 1.58 | 1.52 | 1.46 | 1.39 | ||||||||
| Risk-based Capital Ratios | ||||||||||||
| Tier I leverage ratio | 10.13 | % | 9.62 | % | 10.10 | % | 8.11 | % | ||||
| Tier I risk-based capital ratio | 11.90 | 11.98 | 12.13 | 9.55 | ||||||||
| Total risk-based capital ratio | 13.80 | 13.89 | 14.05 | 11.49 | ||||||||
| FTE employees | 281 | 278 | 276 | 283 | ||||||||
SOURCE: Porter Bancorp, Inc.
Porter Bancorp, Inc.
Maria L. Bouvette, 502-499-4800, Ext. 3601
President and CEO
Copyright Business Wire 2009