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Porter Bancorp, Inc. Reports First Quarter 2014 Results

  Porter Bancorp, Inc. Reports First Quarter 2014 Results   First Quarter 2014 Net Loss Attributable to Common Shareholders of $976,000  Business Wire  LOUISVILLE, Ky. -- April 30, 2014  Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBIBank, with 18full-service banking centers in Kentucky, today reported unaudited results for the first quarter of 2014.  The Company reported that the net loss attributable to common shareholders decreased to $976,000, or ($0.08) per diluted share, for the first quarter of 2014 compared to a net loss of $1,028,000, or ($0.09) per diluted share for the fourth quarter of 2013 and increased compared to the net loss of $524,000, or ($0.04) per diluted share, for the first quarter of 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 developing new quality financial relationships.  First Quarter 2014 Financial Performance Highlights    *Net Interest Income – Net interest income declined to $7.3 million for the     first quarter of 2014 compared with $7.6 million in the fourth quarter of     2013 and $8.3 million in the first quarter of 2013 as average loans     declined to $698.2 million for the first quarter of 2014 compared with     $719.2 million in the fourth quarter of 2013 and $872.5 million in the     first quarter of 2013. Net interest margin remained consistent at 2.96% in     the first quarter of 2014, compared with 2.96% in the fourth quarter of     2013, and declined from 3.07% in the first quarter of 2013.    *Provision for Loan Losses – No provision for loan losses expense was     recorded for the first quarter of 2014 or the fourth quarter of 2013,     compared to $450,000 in the first quarter of 2013. The reduction in     provision for loan losses benefited from 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 4.10% at March     31, 2014, compared with 4.41% at December 31, 2013, and 4.88% at March 31,     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 $123.3 million, or 11.59% of total assets at     March 31, 2014, compared with $132.9million, or 12.35% of total assets,     at December 31, 2013.  Non-performing loans decreased to $77.3 million, or 11.33% of total loans, at March 31, 2014, compared with $102.0million, or 14.38% of total loans, at December 31, 2013. The decline was primarily driven by $16.9 million of nonaccrual loans migrating to OREO, $10.2 million in principal payments received on nonaccrual loans, and $2.7 million of net charge-offs.  Non-performing loans and OREO remain at elevated levels and continue to negatively impact financial performance.                     March       December     September      June 30,      March 31,                   31,        31,        30,                                                                                 2013          2013                    2014        2013         2013                    (in thousands) Past due                                                            loans: 30 – 59 days     $ 5,667     $ 10,696       $ 10,018       $ 8,600       $ 8,052 60 – 89 days       1,232       775            7,582          2,979         2,960 90 days or         —           232            —              71            — more Nonaccrual        77,344     101,767       106,922       112,185      120,943 loans Total past due and nonaccrual   $ 84,243    $ 113,470      $ 124,522      $ 123,835     $ 131,955 loans                                                                             Loans past due 90 days or       $ —         $ 232          $ —            $ 71          $ — more Nonaccrual         77,344      101,767        106,922        112,185       120,943 loans OREO              45,918     30,892        41,857        47,030       44,192 Total non-performing   $ 123,262   $ 132,891     $ 148,779     $ 159,286    $ 165,135 assets   In addition to nonaccrual loans and OREO, loans classified as Troubled Debt Restructures (TDRs) and on accrual totaled $41.8 million at March 31, 2014, compared to $44.3 million at December 31, 2013 and $55.2 million at March 31, 2013.  OREO at March 31, 2014 increased to $45.9 million, compared with $30.9 million at December 31, 2013, and $44.2 million at March 31, 2013. The Company acquired $17.4 million in OREO and sold $2.1 million in OREO during the first quarter of 2014. Fair value write-downs arising from new appraisals or lower marketing prices totaled $250,000 in the first quarter of 2014, compared with $882,000 in the fourth quarter of 2013 and $307,000 in the first quarter of 2013.    *Non-interest Expense – Non-interest expense decreased $547,000 to $8.5     million for the first quarter of 2014, compared with $9.0 million for the     fourth quarter of 2013, and decreased $1.1 million compared with $9.6     million for the first quarter of 2013. The reduction in non-interest     expense was attributable primarily to lower loan collection expenses and     lower OREO expenses.   *Capital – At March 31, 2014, PBI Bank’s Tier 1 leverage ratio was 6.36%     compared with 6.28% at December 31, 2013, and its Total risk-based capital     ratio was 11.50% at March 31, 2014 compared with 11.44% at December     31,2013, which are below the minimums of 9.0% and 12.0% required by the     Bank’s Consent Order. At March 31, 2014, Porter Bancorp’s leverage ratio     was 4.87% compared with 4.95% at December 31, 2013, and its Total     risk-based capital ratio was 10.93%, compared with 11.03% at December 31,     2013.  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, increase net interest income in a low interest rate environment, cybersecurity risks that may result in increased costs for us to protect against the risks, as well as liability or reputational damage to the Company in the event of a breach of our security, 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 first quarter ending March 31, 2014 follows.     PORTER BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)                               Three           Three           Three                               Months           Months           Months                               Ended            Ended            Ended                               3/31/14          12/31/13         3/31/13                                Income Statement Data Interest income               $ 9,897          $10,259          $ 11,258 Interest expense               2,597         2,673            2,960                                      Net interest income             7,300          7,586              8,298 Provision for loan losses      —             —                450                                                                         Net interest income after       7,300          7,586              7,848 provision                                                                  Service charges on deposit      468            523                493 accounts Income from fiduciary           —              —                  517 activities Bank card interchange fees      161            176                172 Other real estate owned         7              3                  112 income Gain (loss) on sales of         44             (4           )     — securities, net Income from bank owned life     76             75                 79 insurance Other                          159           184              274                                        Non-interest income             915            957                1,647                                                                  Salaries & employee             3,741          3,526              4,139 benefits Occupancy and equipment         892            855                931 Other real estate owned         662            1,399              791 expense FDIC insurance                  540            511                639 Franchise tax                   425            333                537 Loan collection expense         539            734                1,035 Professional fees               558            484                406 Communications expense          235            180                175 Postage and delivery            110            109                113 Insurance expense               149            166                151 Other                          651           752              647                                        Non-interest expense            8,502          9,049              9,564                                                                  Income (loss) before income     (287       )   (506         )     (69        ) taxes Income tax expense             —             —                —           (benefit)                                                                Net income (loss)               (287       )   (506         )     (69        ) Less: Dividends on preferred          786            607                438 stock Accretion on preferred          —              25                 45 stock Earnings (loss) allocated      (97        )   (110         )    (28        ) to participating securities                                                                  Net income (loss) available   $ (976       )   $(1,028      )   $ (524       ) to common                                                                                                 Weighted average shares –       12,021,313       11,907,766       11,847,907 Basic Weighted average shares –       12,021,313       11,907,766       11,847,907 Diluted                                                                  Basic earnings (loss) per     $ (0.08      )   $ (0.09      )   $ (0.04      ) common share Diluted earnings (loss) per   $ (0.08      )   $ (0.09      )   $ (0.04      ) 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                               3/31/14          12/31/13         3/31/13                                Average Balance Sheet Data Assets                        $ 1,073,586      $ 1,081,908      $ 1,151,816 Loans                           698,184          719,163          872,505 Earning assets                  1,019,173        1,033,083        1,111,469 Deposits                        984,169          989,847          1,053,884 Long-term debt and advances     35,233           35,652           37,169 Interest bearing                911,186          922,519          983,481 liabilities Stockholders’ equity            36,992           38,035           47,749                                                                                                                                   Performance Ratios Return on average assets        (0.11     )%     (0.19     )%     (0.02     )% Return on average equity        (3.15     )      (5.28     )      (0.59     ) Yield on average earning        3.99             3.99             4.15 assets (tax equivalent) Cost of interest bearing        1.16             1.15             1.22 liabilities Net interest margin (tax        2.96             2.96             3.07 equivalent) Efficiency ratio                104.05           105.87           96.17                                                                                                                                   Loan Charge-off Data Loans charged-off             $ (3,082    )    $ (4,171    )    $ (17,962   ) Recoveries                     373            541            671                                                                        Net charge-offs               $ (2,709    )    $ (3,630    )    $ (17,291   )                                                                                                                                   Nonaccrual Loan Activity Nonaccrual loans at           $ 101,767        $ 106,922        $ 94,517 beginning of period Net principal pay-downs         (10,245   )      (5,151    )      (4,105    ) Charge-offs                     (2,472    )      (3,232    )      (17,472   ) Loans foreclosed and            (16,895   )      (2,064    )      (3,648    ) transferred to OREO Loans returned to accrual       (870      )      (2,459    )      — status Loans placed on nonaccrual     6,059          7,751          51,651     during the period                                                                  Nonaccrual loans at end of    $ 77,344        $ 101,767       $ 120,943    period                                                                                                                                   Troubled Debt Restructurings (TDRs) Accruing                      $ 41,813         $ 44,346         $ 55,171 Nonaccrual                     30,640         46,916         52,592     Total                         $ 72,453         $ 91,262         $ 107,763                                                                                    OREO at beginning of period   $ 30,892         $ 41,857         $ 43,671 Real estate acquired            17,351           2,064            3,680 Valuation adjustment            (250      )      (882      )      (307      ) write-downs Proceeds from sales of          (2,075    )      (12,205   )      (2,655    ) properties Gain (loss) on sales, net      —              58             (197      )                                                                  OREO at end of period         $ 45,918        $ 30,892        $ 44,192         PORTER BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)                               As of           As of           As of                               3/31/14          12/31/13         3/31/13                                                                Assets Loans                         $ 682,591        $ 709,326        $ 827,076 Loan loss reserve              (25,415    )    (28,124    )    (39,839    )                                                                Net loans                       657,176          681,202          787,237 Mortgage loans held for         —                149              — sale Securities held to maturity     43,550           43,612           — Securities available for        166,442          163,344          183,247 sale Federal funds sold &            99,286           103,669          62,505 interest bearing deposits Cash and due from financial     7,449            7,465            8,683 institutions FHLB stock                      7,323            10,072           10,072 Premises and equipment          19,821           19,983           20,667 Other real estate owned         45,918           30,892           44,192 Accrued interest receivable    16,565         15,733         16,266      and other assets                                                                Total Assets                  $ 1,063,530     $ 1,076,121     $ 1,132,869                                                                                                                                   Liabilities and Equity Certificates of deposit       $ 656,475        $ 679,952        $ 739,934 Interest checking               79,689           84,626           83,522 Money market                    89,678           79,349           62,111 Savings                        38,524         36,292         41,952                                                                     Total interest bearing          864,366          880,219          927,519 deposits Demand deposits                110,507        107,486        108,841                                                                    Total deposits                  974,873          987,705          1,036,360 Federal funds purchased &       2,240            2,470            2,853 repurchase agreements FHLB advances                   4,345            4,492            5,324 Junior subordinated             30,625           30,850           31,525 debentures Accrued interest payable       15,110         14,673         10,069      and other liabilities                                                                Total liabilities               1,027,193        1,040,190        1,086,131 Stockholders’ equity           36,337         35,931         46,738                                                                     Total Liabilities and         $ 1,063,530     $ 1,076,121     $ 1,132,869   Stockholders’ Equity                                                                                                                                 Ending shares outstanding       12,894,741       12,840,999       12,139,975 Book value per common share   $ (0.15      )   $ (0.18      )   $ 0.70 Tangible book value per         (0.25      )     (0.29      )     0.55 common share                                                                  Asset Quality Data Loan 90 days or more past     $ —              $ 232            $ — due still on accrual Nonaccrual loans               77,344         101,767        120,943                                                                    Total non-performing loans      77,344           101,999          120,943 Real estate acquired            45,918           30,892           44,192 through foreclosures Other repossessed assets       —              —              —                                                                          Total non-performing assets   $ 123,262       $ 132,891       $ 165,135                                                                    Non-performing loans to         11.33      %     14.38      %     14.62      % total loans Non-performing assets to        11.59            12.35            14.58 total assets Allowance for loan losses       32.86            27.57            32.94 to non-performing loans Allowance as % of loans         2.01             2.32             4.60 evaluated individually Allowance as % of loans         4.10             4.41             4.88 evaluated collectively Allowance for loan losses       3.72             3.96             4.82 to total loans                                                                  Risk-based Capital Ratios Tier I leverage ratio           4.87       %     4.95       %     4.91       % Tier I risk-based capital       7.22             7.34             6.77 ratio Total risk-based capital        10.93            11.03            10.16 ratio                                                                  FTE employees                   263              260              264  Contact:  Porter Bancorp, Inc. John T. Taylor, 502-499-4800 Chief Executive Officer  
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