Porter Bancorp, Inc. Announces Fourth Quarter and 2012 Results

  Porter Bancorp, Inc. Announces Fourth Quarter and 2012 Results

Business Wire

LOUISVILLE, Ky. -- January 30, 2013

Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBIBank, with
18full-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 $105.2million, 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 December31,2012,
compared with $90.1million, 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 September30,2012, 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 December31, 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         $ 13,175         $ 13,987         $ 16,637         $   57,729       $ 73,554
income
Interest           3,601            3,855            4,986              15,774         22,039
expense
Net interest       9,574            10,132           11,651             41,955         51,515
income
Provision for      7,000            25,500           35,800             40,250         62,600
loan losses
Net interest
income after       2,574            (15,368    )     (24,149    )       1,705          (11,085    )
provision
                                                                                                  
Service
charges on         566              563              630                2,239          2,609
deposit
accounts
Income from
fiduciary          374              261              255                1,177          993
activities
Bank card
interchange        174              180              168                727            668
fees
Other real
estate owned       178              180              53                 420            200
rental income
Gains on sales
of loans           78               138              49                 338            713
originated for
sale
Gains on sales
of securities,     (294       )     —                —                  3,236          1,108
net
Other than
temporary          —                —                (41        )       —              (41        )
impairment on
securities
Other              330              399              367                1,453          1,583
Non-interest       1,406            1,721            1,481              9,590          7,833
income
                                                                                                  
Salaries &
employee           4,090            4,264            3,134              16,648         15,218
benefits
Occupancy and      816              971              819                3,642          3,729
equipment
Goodwill           —                —                —                  —              23,794
impairment
Other real
estate owned       2,883            5,204            7,020              10,549         47,525
expense
FDIC insurance     571              559              830                2,835          3,470
Loan
collection         704              792              520                2,442          2,509
expense
Franchise tax      494              496              482                2,174          2,228
Professional       286              776              429                1,985          1,392
fees
Communications     187              175              169                710            678
expense
Borrowing
prepayment         —                —                486                —              486
fees
Postage and        115              108              117                454            485
delivery
Advertising        49               44               32                 154            314
Other              638              761              658                2,699          2,445
Non-interest       10,833           14,150           14,696             44,292         104,273
expense
                                                                                                  
(Loss) before      (6,853     )     (27,797    )     (37,364    )       (32,997  )     (107,525   )
income taxes
Income tax
expense            —                (65        )     18,591             (65      )     (218       )
(benefit)
Net (loss)         (6,853     )     (27,732    )     (55,955    )       (32,932  )     (107,307   )
Less:
Dividends on
preferred          (438       )     (437       )     (438       )       (1,750   )     (1,750     )
stock
Accretion on
preferred          (45        )     (44        )     (44        )       (179     )     (177       )
stock
Loss allocated
to                 343              1,264            1,980              1,429          4,080
participating
securities
Net (loss) to
common           $ (6,993     )   $ (26,949    )   $ (54,457    )   $   (33,432  )   $ (105,154   )
shareholders
                                                                                                  
Weighted
average shares     11,762,330       11,751,818       11,724,456       11,746,719       11,715,461
– Basic
Weighted
average shares     11,762,330       11,751,818       11,724,456       11,746,719       11,715,461
– Diluted
                                                                                                  
Basic (loss)
per common       $ (0.59      )   $ (2.29      )   $ (4.64      )   $ (2.85      )   $ (8.98      )
share
Diluted (loss)
per common       $ (0.59      )   $ (2.29      )   $ (4.64      )   $ (2.85      )   $ (8.98      )
share
Cash dividends
declared per     $ 0.00           $ 0.00           $ 0.00           $ 0.00           $ 0.02
common share
                                                                                                  

                                                                          
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           1,207,711       1,261,864       1,463,093       1,281,735       1,534,875
assets
Deposits          1,162,015       1,196,580       1,379,093       1,217,083       1,434,462
Long-term
debt and          37,710          38,328          44,040          38,634          48,523
advances
Interest
bearing           1,085,424       1,126,045       1,320,481       1,144,480       1,386,740
liabilities
Stockholders’     53,229          81,029          130,250         75,679          159,434
equity
                                                                                            
Performance
Ratios
Return on
average           (2.16)    %     (8.32)    %     (14.14)   %     (2.45)    %     (6.46)    %
assets
Return on
average           (51.22)         (136.16)        (170.44)        (43.52)         (67.30)
equity
Yield on
average
earning           4.38            4.45            4.55            4.54            4.83
assets (tax
equivalent)
Cost of
interest          1.32            1.36            1.50            1.38            1.59
bearing
liabilities
Net interest
margin (tax       3.19            3.23            3.20            3.31            3.40
equivalent)
Efficiency        96.09           119.38          111.56          91.68           138.09
ratio
                                                                                            
Loan
Charge-off
Data
Loans           $ (5,008    )   $ (23,487   )   $ (22,816   )   $ (37,515   )   $ (44,646   )
charged-off
Recoveries        669             412             103             1,366          340
Net             $ (4,339    )   $ (23,075   )   $ (22,713   )   $ (36,149   )   $ (44,306   )
charge-offs
                                                                                            
                                                                                            
Non-Accrual
Loan Activity
Non-accrual
loans at        $ 88,632        $ 81,653        $ 59,132        $ 92,020        $ 59,799
beginning of
period
Loans
returned to       —               —               (123      )     —               (7,792    )
accrual
status
Net principal     (3,576    )     (5,768    )     (5,918    )     (18,668   )     (15,838   )
pay-downs
Charge-offs       (3,856    )     (13,442   )     (14,820   )     (24,512   )     (30,358   )
Loans
foreclosed
and               (1,998    )     (3,339    )     (7,516    )     (24,409   )     (24,549   )
transferred
to OREO
Loan
collateral        —               —               —               —               (10       )
repossessed
Loans placed
on
non-accrual       15,315          29,528          61,265          70,086          110,768
during the
period
Non-accrual
loans at end    $ 94,517        $ 88,632        $ 92,020        $ 94,517        $ 92,020
of period
                                                                                            
Other Real Estate Owned (OREO) Activity
(Net of Allowance)
OREO at
beginning of    $ 48,837        $ 54,365        $ 44,933        $ 41,449        $ 67,635
period
Real estate       1,997           3,405           10,685          33,528          41,917
acquired
Valuation
adjustment        (2,064    )     (4,260    )     (4,172    )     (7,154    )     (34,874   )
write-downs
Proceeds from
sales of          (4,908    )     (4,140    )     (8,657    )     (22,481   )     (25,990   )
properties
Loss on           (191      )     (533      )     (1,340    )     (1,672    )     (8,889    )
sales, net
Capital           —               —               —               1               1,650
improvements
OREO at end     $ 43,671        $ 48,837        $ 41,449        $ 43,671        $ 41,449
of period
                                                                                            

                                                            
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        178,476          198,148          158,833
sale
Federal funds sold &            41,161           69,928           92,034
interest bearing deposits
Cash and due from financial     8,411            11,854           13,928
institutions
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    27,188           38,317          43,501
and other assets
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          950,749          1,066,124        1,212,645
deposits
Demand deposits                114,310          111,403         111,118
Total deposits                  1,065,059        1,177,527        1,323,763
Federal funds purchased &       2,634            2,403            1,738
repurchase agreements
FHLB advances                   5,604            5,960            7,116
Junior subordinated             31,975           32,200           32,650
debentures
Accrued interest payable       10,169           12,967          7,628
and other liabilities
Total liabilities               1,115,441        1,231,057        1,372,895
Stockholders’ equity           47,190           54,984          82,529
Total Liabilities and         $ 1,162,631      $ 1,286,041      $ 1,455,424
Stockholders’ Equity
                                                                             
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         0.58             1.22             3.54
common share
                                                                             
Asset Quality Data
Loan 90 days or more past     $ 86             $ 1,486          $ 1,350
due still on accrual
Non-accrual loans              94,517           88,632          92,020
Total non-performing loans      94,603           90,118           93,370
Real estate acquired            43,671           48,837           41,449
through foreclosures
Other repossessed assets       —                5                5
Total non-performing assets   $ 138,274        $ 138,960       $ 134,824
Non-performing loans to         10.52      %     9.47       %     8.22       %
total loans
Non-performing assets to        11.89            10.81            9.26
total assets
Allowance for loan losses       59.91            59.94            56.31
to non-performing loans
Allowance for loan losses       6.30             5.68             4.63
to total loans
                                                                             
Risk-based Capital Ratios
Tier 1 leverage ratio           4.50       %     5.00       %     6.53       %
Tier 1 risk-based capital       6.46             7.03             9.23
ratio
Total risk-based capital        9.81             10.01            11.22
ratio
                                                                             
FTE employees                   278              291              291

Contact:

Porter Bancorp, Inc.
John T. Taylor, 502-499-4800
President
 
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