-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E98LvPb3ENDHKh7ERt7MCQhOwUpp/5xK7qcrx56Oh/XWJr2AIUA3HHyRrSsh0oFR KIQXVlM25oHtc+YzdVtB7w== 0001157523-07-010187.txt : 20071024 0001157523-07-010187.hdr.sgml : 20071024 20071024171803 ACCESSION NUMBER: 0001157523-07-010187 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20071024 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20071024 DATE AS OF CHANGE: 20071024 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Porter Bancorp, Inc. CENTRAL INDEX KEY: 0001358356 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 611142247 STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-33033 FILM NUMBER: 071188753 BUSINESS ADDRESS: STREET 1: 2500 EASTPOINT PARKWAY CITY: LOUISVILLE STATE: KY ZIP: 40223 BUSINESS PHONE: 502-499-4800 MAIL ADDRESS: STREET 1: 2500 EASTPOINT PARKWAY CITY: LOUISVILLE STATE: KY ZIP: 40223 8-K 1 a5527207.txt PORTER BANCORP, INC. 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 24, 2007 PORTER BANCORP, INC. (Exact name of registrant as specified in its charter) Kentucky 001-33033 61-1142247 -------- --------- ---------- (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification No.) 2500 Eastpoint Parkway, Louisville, Kentucky, 40223 --------------------------------------------------- (Address of principal executive offices) (502) 499-4800 -------------- (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14-2(b)) [_] Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS On October 24, 2007, Porter Bancorp, Inc. issued a press release announcing its financial results for the third quarter ended September 30, 2007. A copy of the press release is attached hereto as Exhibit 99.1. The information in this Form 8-K and in Exhibit 99.1 attached hereto is being furnished to the Securities and Exchange Commission pursuant to Item 2.02 - Results of Operations and Financial Condition and shall not be deemed filed for purposes of Section 18 of the Securities Act of 1934, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS (d) Exhibits Exhibit No. Description of Exhibit - ----------- ---------------------------------------------------------------- 99.1 Press Release issued by Porter Bancorp, Inc. on October 24, 2007 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: October 24, 2007 Porter Bancorp Inc. By: /s/ David Pierce ---------------- David Pierce Chief Financial Officer EXHIBIT INDEX ------------- Exhibit Description - ------- ----------- 99.1 Press Release dated October 24, 2007 EX-99.1 2 a5527207ex991.txt EXHIBIT 99.1 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 -----END PRIVACY-ENHANCED MESSAGE-----