Exhibit 99.1
Porter Bancorp, Inc. Announces Third Quarter 2007 Results
LOUISVILLE, Ky.--(BUSINESS WIRE)--Oct. 24, 2007--Porter Bancorp, Inc.
(NASDAQ: PBIB), parent company of PBI Bank, with offices in Louisville,
Lexington, Shepherdsville, Glasgow, Bowling Green, Owensboro and other central
Kentucky communities, today reported results for the third quarter and nine
months ended September 30, 2007.
The Company reported net income for the third quarter of 2007 of $3.3
million, or $0.44 per share, compared with $3.8 million, or $0.59 per share, for
the third quarter of 2006. Earnings for the nine months ended September 30,
2007, were $10.6 million, or $1.40 per share, compared with $10.6 million, or
$1.67 per share, for the same period of 2006. The reduction in earnings per
share between periods is primarily attributable to the issuance of 1,250,000
shares of common stock in our initial public offering in September 2006 and
robust loan growth requiring us to increase our provision expense to enable us
to maintain strong reserves.
Third Quarter Highlights
-- Our earnings per share decreased 5 cents per share to 44 cents from
the prior quarter due to robust loan growth with the intent to keep
strong reserves. Core earnings for the quarter were impacted by 7
cents per share for additional loan loss provisioning. The loan loss
provision rose to $1,500,000 for the third quarter of 2007 compared
with $276,000 in the same quarter of 2006.
-- Net interest income increased 15.7% to $10.7 million for the three
months ended September 30, 2007, compared with the same quarter of
2006.
-- Total assets increased 25.6% to $1.3 billion since the third quarter
of 2006, fueled by strong growth in loans.
-- Loans grew 31.5% to $1.1 billion compared with the third quarter of
2006.
-- Deposits grew 30.5% to $1.05 billion since the third quarter of 2006.
The Bank's core customer non-interest bearing deposit accounts
increased from $59.8 million to $65.0 million, or 8.6%, during the
first nine months of 2007.
-- The efficiency ratio for the third quarter was a strong 46.1%. The
year-to-date ratio improved to 45.5% at September 30, 2007, from 47.1%
at September 30, 2006.
-- Nonperforming loans as a percentage of total loans at September 30,
2007, were 0.78%, a decline of 44 basis points since September 30,
2006. Nonperforming assets at September 30, 2007, were 1.42% of total
loans, a decline of 6 basis points from September 30, 2006. The linked
quarter increases in these metrics is driven by the residential real
estate market and consists primarily of one borrowing relationship.
This relationship has been thoroughly analyzed and we believe we have
established adequate reserves to account for potential losses. The
loans affiliated with this account are in other real estate and/or
foreclosure status.
-- After the close of the third quarter, Porter Bancorp completed the
acquisition of Ohio County Bancshares, Inc., the holding company for
Kentucky Trust Bank, which operates six retail banking offices in
three Kentucky counties, including the Bowling Green and Owensboro
markets. Headquartered in Beaver Dam, Kentucky, Kentucky Trust Bank
has assets of approximately $120 million. The total acquisition price
paid was $12 million, approximately 50% in cash and 50% in Porter
Bancorp shares. The acquisition was closed effective October 1, 2007,
and will add approximately 260,000 shares to the fourth quarter's
average weighted shares outstanding.
"Loan growth accelerated in the third quarter with the addition of $91.7
million in new loans in the last three months," stated Maria L. Bouvette,
President and CEO of Porter Bancorp, Inc. "We generated more loan volume in the
third quarter of 2007 than for the four quarters in 2006. Loan demand is up
across our core markets and we benefited from loans generated from our new
offices in Lexington and Bowling Green.
"We anticipate the addition of the six Kentucky Trust Offices will have a
positive effect on continued loan growth in the fourth quarter and in the
future. The acquisition expands our contiguous footprint in central Kentucky to
include Daviess and Ohio Counties. It also adds two retail branches in the
fast-growing Bowling Green market, complimenting the loan production office that
we opened earlier this year.
"We launched a new deposit program in the first quarter of 2007 to help
fund loan growth and to expand our customer base," continued Ms. Bouvette.
"We've added almost $185 million in net new deposits in the first nine months of
2007. The Kentucky Trust Offices will be rebranded during the fourth quarter
under the PBI Bank name. We believe the new offices will leverage our existing
presence in central Kentucky and strengthen our retail presence for generating
new loans and deposits."
Net Interest Income
Net interest income was $10.7 million for the three months ended September
30, 2007, an increase of $1.5 million, or 15.7%, compared with $9.3 million for
the same period in 2006. Net interest income was $30.6 million for the nine
months ended September 30, 2007, an increase of $2.9 million, or 10.3%, compared
with $27.7 million for the same period in 2006. This increase was attributable
to the growth in our loan portfolio, partially offset by the reduction in net
interest margin reflecting the effect of a flat yield curve.
Core earnings were impacted by further net interest margin (NIM) pressure
of nine basis points for the quarter due to Federal Reserve interest rate
reductions which we believe will ultimately benefit PBIB and continued use of
higher cost deposits to fund our loan growth. We are cautiously optimistic that
we will be able to keep the NIM fairly stable going forward.
Net interest margin for the third quarter of 2007 declined to 3.60%
compared with 3.95% for the third quarter of 2006. Our yield on earning assets
increased to 7.96% for the third quarter of 2007 compared to 7.87% for the third
quarter of 2006, while our cost of funds increased to 4.93% for the third
quarter of 2007 compared to 4.40% for the third quarter of 2006. Net interest
margin decreased nine basis points from our margin of 3.69% in the second
quarter of 2007. Our yield on earning assets remained unchanged from 7.96%
during the second quarter of 2007 while our cost of funds increased seven basis
points from 4.86%. This was due in part to our use of promotional pricing for
new deposit accounts in our marketing efforts to attract premium customers in
our new markets.
Non-Interest Income
Non-interest income remained stable at $1.3 million in the third quarter
and second quarter of 2007 and the third quarter of 2006. Non-interest income
was $3.8 million in the first nine months of 2007 compared with $4.0 million for
the same period of 2006. This decrease is primarily attributable to lower
service charges on deposit accounts. Product fee changes implemented during the
first quarter of 2007 have resulted in increased fees during the second and
third quarter.
"We acquired a trust operation as part of the Ohio County Bancshares
acquisition," continued Ms. Bouvette. "We plan to leverage this operation by
adding trust services in selective markets. We believe the new trust services
will enhance our customer services while providing a new source of non-interest
income.
Non-Interest Expense
Non-interest expense for the third quarter increased 18.8% from prior year
third quarter. This was due primarily to increased salaries and benefits expense
to support the addition of new offices opened this year. Our efficiency ratio
continues to outperform our peers at 45.5% for the first nine months of 2007
compared with 47.1% for the first nine months of 2006.
Balance Sheet Review
Total assets increased 19.4%, or $204 million, to $1.26 billion at
September 30, 2007, from $1.05 billion at December 31, 2006. The Company's loan
portfolio increased 25.8%, or $221 million, to $1.08 billion from $854.4 million
at December 31, 2006, primarily due to in-house loan origination efforts of our
lending staff. Deposits at September 30, 2007, increased 21.5% to $1.05 billion
from $861.9 million at December 31, 2006, primarily due to an increase in both
time deposits and transactional accounts from promotional efforts throughout the
period.
Asset Quality
"Our asset quality remains very strong as evidenced by the reduction in
non-performing loans to total loans since the third quarter of last year,"
continued Ms. Bouvette. "Our ratio of non-performing loans to total loans
dropped to 0.78% at September 30, 2007, compared with 1.22% for the same date in
2006. We have also improved our coverage ratio of allowance for loan losses to
non-performing loans from 126.91% in the third quarter of last year to 173.34%
for the third quarter of 2007. We have no exposure to subprime loans and we
remain focused on maintaining our excellent loan quality to support future
earnings growth."
Nonperforming loans at September 30, 2007, were $8.4 million, or 0.78% of
total loans, compared with $7.2 million, or 0.73% of total loans at June 30,
2007, and $8.9 million, or 1.05% of total loans at December 31, 2006. The
decrease of $575,000 in nonperforming loans from December 31, 2006 to September
30, 2007, is primarily attributable to our collection efforts via foreclosure
and collateral repossession.
Foreclosed properties at September 30, 2007, were $6.9 million compared
with $2.1 million at September 30, 2006, and $4.1 million at June 30, 2007. The
increase in foreclosed properties reflects the normal progression of troubled
loans through workout, collateral repossession, and ultimate disposition.
Our loan loss reserve as a percentage of total loans at September 30, 2007,
decreased to 1.35% from 1.55% at September 30, 2006, and 1.37% at June 30, 2007.
Provision for loan losses increased $1.2 million to $1.5 million for the three
months ended September 30, 2007, and increased $1.8 million to $2.8 million for
the first nine months of 2007 compared to the same periods ended September 30,
2006. The increase in the loan loss provision for the first nine months of 2007
reflected the strong growth in the loan portfolio requiring a larger provision
to remain consistent with historical experience. Net loan charge-offs for the
third quarter of 2007 were $479,000, or 0.06% of average loans annualized, and
0.16% annualized for the first nine months of 2007. We assess the adequacy of
our loan loss reserve each quarter and make the appropriate provision for loan
losses based on that assessment.
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.
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 and nine
months ending September 30, 2007 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
9/30/07 6/30/07 9/30/06 9/30/07 9/30/06
---------- ---------- ---------- ---------- ----------
Income Statement
Data
Interest income $ 23,851 $ 21,935 $ 18,564 $ 65,840 $ 53,498
Interest expense 13,115 11,815 9,285 35,240 25,765
--------- --------- --------- --------- ---------
Net interest
income 10,736 10,120 9,279 30,600 27,733
Provision for
loan losses 1,500 700 276 2,825 1,029
Service charges
on deposit
accounts 669 648 615 1,852 1,963
Gains on sales
of government
guaranteed
loans, net 15 15 53 30 152
Gains on sales
of loans
originated for
sale, net - - 44 - 284
Gains on sales
of securities,
net 42 62 23 104 50
Other 580 583 582 1,804 1,564
--------- --------- --------- --------- ---------
Non-interest
income 1,306 1,308 1,317 3,790 4,013
Salaries &
employee
benefits 3,115 3,001 2,749 9,051 8,634
Occupancy and
equipment 673 599 612 1,837 1,972
Franchise tax 326 325 267 976 807
Communications
expense 113 99 121 322 404
Advertising 140 114 148 393 467
Other 1,162 973 756 3,017 2,656
--------- --------- --------- --------- ---------
Non-interest
expense 5,529 5,111 4,653 15,596 14,940
Income before
income taxes 5,013 5,617 5,667 15,969 15,777
Income tax
expense 1,714 1,928 1,858 5,380 5,135
--------- --------- --------- --------- ---------
Net income $ 3,299 $ 3,689 $ 3,809 $ 10,589 $ 10,642
========= ========= ========= ========= =========
Weighted average
shares - Basic 7,586,167 7,586,167 6,454,730 7,585,063 6,373,656
Weighted average
shares -
Diluted 7,586,167 7,586,167 6,454,730 7,585,085 6,373,656
Basic and
diluted
earnings per
share $ 0.44 $ 0.49 $ 0.59 $ 1.40 $ 1.67
Cash dividends
declared per
share $ 0.20 $ 0.20 $ 0.20 $ 0.60 $ 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
9/30/07 6/30/07 9/30/06 9/30/07 9/30/06
---------- ---------- -------- ---------- --------
Average
Balance Sheet
Data
Assets $1,247,149 $1,161,738 $988,265 $1,159,254 $985,074
Loans 1,039,355 955,896 811,838 962,822 807,104
Earning assets 1,193,227 1,110,384 940,831 1,107,504 936,821
Deposits 1,028,067 939,634 797,908 948,315 803,569
Long-term debt
and advances 92,149 101,648 101,477 88,954 93,769
Interest
bearing
liabilities 1,056,287 974,738 837,381 971,571 836,859
Stockholders'
equity 113,350 112,672 78,410 112,097 75,945
Performance
Ratios
Return on
average
assets 1.05% 1.27% 1.53% 1.22% 1.44%
Return on
average
equity 11.55 13.13 19.27 12.63 18.74
Yield on
average
earning
assets (tax
equivalent) 7.96 7.96 7.87 7.98 7.68
Cost of
interest
bearing
liabilities 4.93 4.86 4.40 4.85 4.12
Net interest
margin (tax
equivalent) 3.60 3.69 3.95 3.73 4.00
Efficiency
ratio 46.08 44.97 44.01 45.49 47.14
Loan Charge-
off Data
Loans charged-
off $ (519) $ (512) $ (281) $ (1,345) $ (774)
Recoveries 40 80 49 188 203
--------- --------- ------- --------- -------
Net charge-
offs $ (479) $ (432) $ (232) $ (1,157) $ (571)
PORTER BANCORP, INC. AND SUBSIDIARY
Unaudited Financial Information
(in thousands, except share and per share data)
As of As of As of As of
9/30/07 6/30/07 12/31/06 9/30/06
--------- ---------- ---------- ----------
Assets
Loans $1,075,069 $ 983,343 $ 854,367 $ 817,421
Loan loss reserve (14,500) (13,479) (12,832) (12,655)
---------- --------- --------- ---------
Net loans 1,060,569 969,864 841,535 804,766
Securities available
for sale 100,723 101,733 95,090 95,722
Federal funds sold &
interest bearing
deposits 9,224 49,293 40,957 24,416
Cash and due from
financial
institutions 17,704 15,821 15,306 17,038
Premises and equipment 14,935 14,414 13,774 13,794
Goodwill 12,881 12,881 12,881 12,881
Accrued interest
receivable and other
assets 39,044 34,176 31,463 31,044
---------- --------- --------- ---------
Total Assets $1,255,080 $1,198,182 $1,051,006 $ 999,661
========== ========= ========= =========
Liabilities and Equity
Certificates of
deposit $ 783,171 $ 727,053 $ 656,691 $ 618,174
Interest checking 54,241 44,573 50,840 51,399
Money market 113,061 106,691 61,666 41,115
Savings 25,267 25,379 23,479 24,196
---------- --------- --------- ---------
Total interest bearing
deposits 975,740 903,696 792,676 734,884
Demand deposits 71,038 73,265 69,180 67,534
---------- --------- --------- ---------
Total deposits 1,046,778 976,961 861,856 802,418
Federal funds
purchased &
repurchase agreements 11,569 1,491 1,134 1,301
FHLB advances 50,207 76,479 47,562 56,964
Junior subordinated
debentures 25,000 25,000 25,000 25,000
Accrued interest
payable and other
liabilities 7,328 6,397 7,108 8,172
---------- --------- --------- ---------
Total liabilities 1,140,882 1,086,328 942,660 893,855
Stockholders' equity 114,198 111,854 108,346 105,806
---------- --------- --------- ---------
Total Liabilities and
Stockholders' Equity $1,255,080 $1,198,182 $1,051,006 $ 999,661
========== ========= ========= =========
Ending shares
outstanding 7,628,967 7,629,102 7,622,447 7,620,497
Book value per share $ 14.97 $ 14.66 $ 14.21 $ 13.88
Tangible book value
per share 13.25 13.01 12.45 12.15
Asset Quality Data
Loan 90 days or more
past due still on
accrual $ 2,829 $ 1,485 $ 2,010 $ 2,356
Non-accrual loans 5,536 5,704 6,930 7,616
---------- --------- --------- ---------
Total non-performing
loans 8,365 7,189 8,940 9,972
Real estate acquired
through foreclosures 6,862 4,118 2,415 2,093
Other repossessed
assets - 9 9 9
---------- --------- --------- ---------
Total non-performing
assets $ 15,227 $ 11,316 $ 11,364 $ 12,074
========== ========= ========= =========
Non-performing loans
to total loans 0.78% 0.73% 1.05% 1.22%
Non-performing assets
to total loans 1.42 1.15 1.33 1.48
Allowance for loan
losses to non-
performing loans 173.34 187.49 143.53 126.91
Allowance for loan
losses to total loans 1.35 1.37 1.50 1.55
Risk-based Capital
Ratios
Tier I leverage ratio 10.22% 10.82% 11.86% 12.06%
Tier I risk-based
capital ratio 11.84 12.64 14.32 14.73
Total risk-based
capital ratio 13.09 13.89 15.57 15.99
FTE employees 237 233 218 218
PBIB-F
CONTACT: Porter Bancorp, Inc.
Maria L. Bouvette, President and CEO
502-499-4800