Porter Bancorp, Inc. Reports $6.5 Million Improvement over Fourth Quarter 2012

  Porter Bancorp, Inc. Reports $6.5 Million Improvement over Fourth Quarter
  2012

                   First Quarter 2013 Net Loss of $524,000

Business Wire

LOUISVILLE, Ky. -- April 30, 2013

Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBIBank, with
18full-service banking offices in Kentucky, today reported unaudited results
for the first quarter of 2013.

The Company reported a net loss available to common shareholders of $524,000,
or ($0.04) per diluted share, for the first quarter of 2013 compared with net
income of $985,000, or $0.08 per diluted share, for the first quarter of 2012.
The first quarter 2012 results included a $2.0 million gain on sale of
securities that was not repeated in the first quarter of 2013.

The first quarter 2013 loss of $524,000 represents a $6.5 million improvement
compared with the $7.0 million loss reported in the fourth quarter of 2012.
The reduced loss benefited from a $6.6 million reduction in the provision for
loan losses, higher non-interest income, and lower non-interest expense,
including a $2.1 million reduction in other real estate owned expenses,
compared with the fourth quarter of 2012.

The provision for loan losses decreased significantly in the first quarter of
2013 to $450,000 compared to $3.8 million in the first quarter of 2012. The
decrease was primarily attributable to the reduction in the loan portfolio
size, the slower pace of loans migrating downward in risk grade
classification, and lower credit costs for declining collateral values for
collateral dependent loans.

We have successfully reduced the size of our balance sheet over the past
twelve months in accordance with our capital plan. Average assets were $1.15
billion in the first quarter of 2013 compared to $1.41 billion in the first
quarter of 2012. This was accomplished primarily by reducing our commercial
real estate and construction and development loans within our loan portfolio
and through the redemption of higher cost certificates of deposit accounts.
The reduction of our balance sheet was the primary driver for net interest
income declining by $3.2 million to $8.3 million in the first quarter of 2013
compared to $11.5 million in the first quarter of 2012. Additionally, our net
interest margin declined to 3.07% in the first quarter of 2013 compared to
3.45% in the first quarter of 2012 and 3.19% in the fourth quarter of 2012.

Financial performance continues to be negatively impacted by the Bank’s high
level of non-performing loans and other real estate owned. Non-performing
assets, which include loans past due 90 days and still accruing, loans on
nonaccrual, and other real estate owned, increased to $165.1 million, or
14.58% of total assets, compared with $138.3million, or 11.89% of total
assets, at December 31, 2012.

Non-accrual loans increased to $120.9 million, or 14.62% of total loans, at
March 31, 2013, compared with $94.6million, or 10.52% of total loans, at
December 31, 2012. The increase was primarily attributable to loans for two
significant borrowing relationships, which together totaled $36.2 million,
being placed on non-accrual. At December 31, 2012, these relationships were
past due 30-59 days and 60-89 days, respectively. The increase in non-accrual
loans was partially offset by net loan charge-offs in the first quarter of
2013 which totaled $17.3 million. These elevated charge-offs were primarily
the result of relieving specific reserves for loans that were deemed to be
collateral dependent, in accordance with regulatory guidance.

Total past due and non-accrual loans decreased approximately $21.2 million to
$132.0 million at March 31, 2013 from $153.1 million at December 31, 2012.

                                      March 31,   December 31,   Increase/
                                                             
                                      2013        2012           (Decrease)
                                      (in thousands)
Past Due Loans:
30 – 59 Days                          $ 8,052     $   38,219     $ (30,167 )
60 – 89 Days                            2,960         20,303       (17,343 )
90 Days and Over                        —             86           (86     )
                                                                   
Nonaccrual Loans                       120,943      94,517      26,426  
Total Past Due and Nonaccrual Loans   $ 131,955   $   153,125    $ (21,170 )
                                                                           

Foreclosed properties at March 31, 2013 increased to $44.2 million compared
with $43.7 million at December31,2012, and $35.6 million at March 31, 2012.
The Company acquired $3.7 million in other real estate owned and sold $2.9
million in other real estate owned during the first quarter of 2013. Fair
value write-downs arising from new appraisals or lower marketing prices
totaled $307,000 in the first quarter of 2013 compared to $480,000 in the
first quarter of 2012 and $2.1 million in the fourth quarter of 2012.

At March 31, 2013, PBI Bank’s Tier 1 leverage ratio was 5.95% compared to
5.37% at December 31, 2012 and its Total risk-based capital ratio was 10.29%
at March 31, 2013 compared to 9.82% at December 31, 2012, which are below the
minimums of 9.0% and 12.0% required by the Bank’s Consent Order. At March 31,
2013, Porter Bancorp’s leverage ratio was 4.91%, compared with 4.50% at
December 31, 2012, and its Total risk-based capital ratio was 10.16% compared
with 9.81% at December 31, 2012.

We are continuing our efforts to strengthen our capital levels and comply with
the Consent Order. 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. As previously announced, Sandler O’Neill &
Partners, LP is acting as our financial advisor and assisting our Board in
this evaluation. Asset quality remediation, capital restoration, and lowering
the risk profile of the Company continue to be major objectives during 2013 as
well as delivering quality financial products and services to our customers
throughout the Commonwealth of Kentucky.

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 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 first quarter ending
March 31, 2013 follows.




PORTER BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share data)

                               Three           Three           Three
                                Months           Months           Months
                                Ended            Ended            Ended
                                3/31/13          12/31/12         3/31/12
                                                                
Income Statement Data
Interest income                 $ 11,258         $ 13,175         $ 15,755
Interest expense                 2,960          3,601          4,301
                                                                
Net interest income               8,298            9,574            11,454
Provision for loan losses        450            7,000          3,750
                                                                
Net interest income after         7,848            2,574            7,704
provision
                                                                  
Service charges on deposit        493              566              554
accounts
Income from fiduciary             517              374              251
activities
Bank card interchange fees        172              174              174
Other real estate owned           112              178              37
income
Gains on sales of loans           58               78               45
originated for sale
Gains (losses) on sales of        —                (294       )     2,019
securities, net
Other                            295            330            365
                                                                
Non-interest income               1,647            1,406            3,445
                                                                  
Salaries & employee benefits      4,139            4,090            4,312
Occupancy and equipment           931              816              886
Other real estate owned           791              2,883            1,257
expense
FDIC insurance                    639              571              873
Franchise tax                     537              494              592
Loan collection expense           1,035            704              360
Professional fees                 406              286              356
Communications expense            175              187              180
Postage and delivery              113              115              122
Insurance expense                 151              77               97
Other                            647            610            612
                                                                
Non-interest expense              9,564            10,833           9,647
                                                                  
Income (loss) before income       (69        )     (6,853     )     1,502
taxes
Income tax expense               —              —              —
                                                                
Net income (loss)                 (69        )     (6,853     )     1,502
Less:
Dividends on preferred stock      438              438              437
Accretion on preferred stock      45               45               45
Earnings (loss) allocated to     (28        )    (343       )    35
participating securities
                                                                  
Net income (loss) available     $ (524       )   $ (6,993     )   $ 985
to common
                                                                
                                                                  
Weighted average shares –         11,847,907       11,762,330       11,735,451
Basic
Weighted average shares –         11,847,907       11,762,330       11,735,451
Diluted
                                                                  
Basic earnings (loss) per       $ (0.04      )   $ (0.59      )   $ 0.08
common share
Diluted earnings (loss) per     $ (0.04      )   $ (0.59      )   $ 0.08
common share
Cash dividends declared per     $ 0.00           $ 0.00           $ 0.00
common share




PORTER BANCORP, INC.

Unaudited Financial Information

(in thousands, except share and per share data)

                              Three           Three           Three
                               Months           Months           Months
                               Ended            Ended            Ended
                               3/31/13          12/31/12         3/31/12
                                                               
Average Balance Sheet Data
Assets                         $ 1,151,816      $ 1,264,867      $ 1,412,606
Loans                            872,505          928,974          1,119,181
Earning assets                   1,111,469        1,201,711        1,350,878
Deposits                         1,053,884        1,162,015        1,279,287
Long-term debt and advances      37,169           37,710           39,551
Interest bearing liabilities     983,481          1,085,424        1,207,855
Stockholders’ equity             47,749           53,229           84,659
                                                                 
                                                                 
Performance Ratios
Return on average assets         (0.02     )%     (2.16     )%     0.43
Return on average equity         (0.59     )      (51.22    )      7.14
Yield on average earning         4.15             4.38             4.73
assets (tax equivalent)
Cost of interest bearing         1.22             1.32             1.43
liabilities
Net interest margin (tax         3.07             3.19             3.45
equivalent)
Efficiency ratio                 96.17            96.09            74.90
                                                                 
Loan Charge-off Data
Loans charged-off              $ (17,962   )    $ (5,008    )    $ (2,582    )
Recoveries                      671            669            206       
                                                               
Net charge-offs                $ (17,291   )    $ (4,339    )    $ (2,376    )
Non-Accrual Loan Activity
Non-accrual loans at           $ 94,517         $ 88,632         $ 92,020
beginning of period
Net principal pay-downs          (4,105    )      (3,576    )      (5,240    )
Charge-offs                      (17,472   )      (3,856    )      (2,312    )
Loans foreclosed and             (3,648    )      (1,998    )      (3,829    )
transferred to OREO
Loans placed on non-accrual     51,651         15,315         16,591    
during the period
                                                                 
Non-accrual loans at end of    $ 120,943       $ 94,517        $ 97,230    
period
                                                                 
                                                                 
Troubled Debt Restructurings
(TDRs):
Accruing                       $ 55,171         $ 77,344         $ 85,327
Non-accrual                     52,592         40,464         46,171    
Total                          $ 107,763        $ 117,808        $ 131,498
                                                                 
Other Real Estate Owned (OREO) Activity (Net of Allowance)
OREO at beginning of period    $ 43,671         $ 48,837         $ 41,449
Real estate acquired             3,680            1,997            4,216
Valuation adjustment             (307      )      (2,064    )      (480      )
write-downs
Proceeds from sales of           (2,655    )      (4,908    )      (9,210    )
properties
Loss on sales, net               (197      )      (191      )      (402      )
Capital improvements            —              —              1         
                                                                 
OREO at end of period          $ 44,192         $ 43,671         $ 35,574




PORTER BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share data)

                             As of           As of           As of
                              3/31/13          12/31/12         3/31/12
                                                              
Assets
Loans                         $ 827,076        $ 899,092        $ 1,098,712
Loan loss reserve              (39,839    )    (56,680    )    (53,953    )
                                                              
Net loans                       787,237          842,412          1,044,759
Mortgage loans held for         —                507              250
sale
Securities available for        183,247          178,476          174,918
sale
Federal funds sold &            62,505           41,161           62,560
interest bearing deposits
Cash and due from financial     8,683            8,411            10,047
institutions
Premises and equipment          20,667           20,805           21,296
Other real estate owned         44,192           43,671           35,574
Deferred tax assets             —                —                —
Accrued interest receivable    26,338         27,188         40,219     
and other assets
                                                              
Total Assets                  $ 1,132,869     $ 1,162,631     $ 1,389,623  
                                                              
                                                                
Liabilities and Equity
Certificates of deposit       $ 739,934        $ 760,573        $ 951,503
Interest checking               83,522           87,234           85,608
Money market                    62,111           63,715           63,701
Savings                        41,952         39,227         38,631     
                                                              
Total interest bearing          927,519          950,749          1,139,443
deposits
Demand deposits                108,841        114,310        114,304    
                                                              
Total deposits                  1,036,360        1,065,059        1,253,747
Federal funds purchased &       2,853            2,634            1,926
repurchase agreements
FHLB advances                   5,324            5,604            6,789
Junior subordinated             31,525           31,975           32,425
debentures
Accrued interest payable       10,069         10,169         11,945     
and other liabilities
                                                              
Total liabilities               1,086,131        1,115,441        1,306,832
Stockholders’ equity           46,738         47,190         82,791     
                                                              
Total Liabilities and         $ 1,132,869     $ 1,162,631     $ 1,389,623  
Stockholders’ Equity
                                                              
                                                                
Ending shares outstanding       12,139,975       12,002,421       11,822,102
Book value per common share   $ 0.70           $ 0.74           $ 3.76
Tangible book value per         0.55             0.58             3.57
common share
                                                                
Asset Quality Data
Loan 90 days or more past     $ —              $ 86             $ 733
due still on accrual
Non-accrual loans              120,943        94,517         97,230     
                                                              
Total non-performing loans      120,943          94,603           97,963
Real estate acquired            44,192           43,671           35,574
through foreclosures
Other repossessed assets       —              —              11         
                                                              
Total non-performing assets   $ 165,135       $ 138,274       $ 133,548    
                                                              
Non-performing loans to         14.62      %     10.52      %     8.92       %
total loans
Non-performing assets to        14.58            11.89            9.61
total assets
Allowance for loan losses       32.94            59.91            55.07
to non-performing loans
Allowance for loan losses       4.82             6.30             4.91
to total loans
                                                                
Risk-based Capital Ratios
Tier I leverage ratio           4.91       %     4.50       %     7.30       %
Tier I risk-based capital       6.77             6.46             9.68
ratio
Total risk-based capital        10.16            9.81             11.68
ratio
                                                                
FTE employees                   264              278              298

Contact:

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