LIMESTONE BANCORP, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 2, 2012

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8-K - PORTER BANCORP, INC. 8-K - LIMESTONE BANCORP, INC.a50154645.htm

Exhibit 99.1

Porter Bancorp, Inc. Announces Fourth Quarter 2011 Loss Related to Establishment of Deferred Tax Asset Valuation Allowance and Credit Losses

LOUISVILLE, Ky.--(BUSINESS WIRE)--February 2, 2012--Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, with 18 full-service banking offices in Kentucky, today reported unaudited results for the fourth quarter and year ended December 31, 2011.

The Company reported a net loss to common shareholders of $45.4 million, or $(3.88) per diluted share, for the fourth quarter of 2011. Net loss to common shareholders for the year ended December 31, 2011, was $96.2 million, or $(8.21) per fully diluted common share.

“Porter Bancorp’s fourth quarter loss was due primarily to the establishment of a 100% valuation allowance for our $28.5 million deferred tax asset, $27.0 million provision for loan losses, and $4.2 million write-down of other real estate owned (OREO),” stated Maria L. Bouvette, President and Chief Executive Officer.

Non-performing loans increased to $68.9 million, or 6.04% of total loans, at December 31, 2011, compared with $59.8 million, or 4.96% of total loans, at September 30, 2011. Non-performing assets increased to $110.3 million, or 7.53% of total assets, compared with $104.7 million, or 6.64% of total assets, at September 30, 2011.

Foreclosed properties at December 31, 2011, declined to $41.4 million compared with $67.6 million at December 31, 2010, and $44.9 million at September 30, 2011. Our ratio of non-performing assets to total assets increased to 7.53% at December 31, 2011, compared with 7.43% at December 31, 2010. “During the fourth quarter, we continued to explore opportunities to bulk sell a package of OREO. In January 2012, we were successful in selling real estate owned of approximately $4.6 million. We remain focused on aggressively reducing our nonperforming assets in light of the sluggish economic recovery, continued weakness in local real estate activities, and declining values of real estate in certain market sectors. We believe this strategic focus will be key to improving our nonperforming asset ratios and our long term profitability,” concluded Ms. Bouvette.

Our loan loss reserve as a percentage of total loans was increased to 4.20% at December 31, 2011, compared with 2.63% at December 31, 2010. Net loan charge-offs for the fourth quarter of 2011 were $18.6 million, or 1.57% of average loans for the quarter.

Our provision for loan losses was $27.0 million in the fourth quarter of 2011, an increase from $8.0 million in the third quarter of 2011, and an increase from $15.5 million in the prior year fourth quarter.

On January 30, 2012, PBI Bank filed its Call Report with the FDIC for the period ended December 31, 2011, indicating that its Tier 1 leverage ratio had declined to 6.83% and its total risk-based capital ratio had declined to 11.61%, which are below the minimums of 9.0% and 12.0% required by the Bank’s Consent Order. The decline in these ratios means PBI Bank does not meet the minimum capital levels established under the Consent Order. At December 31, 2011, Porter Bancorp’s leverage ratio was 7.13% and its total risk-based capital ratio was 11.97%. We are continuing our efforts to strengthen our capital levels and comply with the Consent Order.

On January 30, 2012, the Federal Deposit Insurance Corporation and the Kentucky Department of Financial Institutions began their routine annual safety and soundness examination of PBI Bank. The banking regulators spend significant time reviewing our asset valuations and often provide us with valuable insight which influences our decision-making on the carrying value of loans, the allowance for loan losses, real estate owned and other assets. While we do not expect to receive our final report of examination prior to filing our 2011 Form 10-K, we often receive meaningful input from the regulators in the course of their examination. Should we receive information from our regulators which would cause us to further refine our asset valuations prior to filing our 2011 Form 10-K the financial information included in our 2011 Form 10-K could differ from the information presented in this release.

Non-Accrual Loan Activity
 
(in thousands)
Non-accrual loans at September 30, 2011 $ 59,132
Loans returned to accrual status (123)
Net principal pay-downs (5,500)
Charge-offs (11,845)
Loans foreclosed and transferred to OREO (7,516)
Loans placed on non-accrual during the period 33,018
 
Non-accrual loans at December 31, 2011 $ 67,166
Other Real Estate Owned (OREO) Activity (Net of Allowance)
 
(in thousands)
OREO at September 30, 2011 $ 44,933
Real estate acquired 10,685
Valuation adjustment write downs (4,172)
Proceeds from sales of properties (8,657)
Gain (loss) on sales, net (1,340)
 
OREO at December 31, 2011 $ 41,449

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, 2011 follows.

PORTER BANCORP, INC. AND SUBSIDIARY

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
12/31/11 9/30/11 12/31/10 12/31/11 12/31/10

 

 

 

Income Statement Data
Interest income $ 17,137 $ 18,103 $ 20,315 $ 74,054 $ 86,407
Interest expense 4,986 5,448 6,229 22,039 28,841

 

 

 

Net interest income 12,151 12,655 14,086 52,015 57,566
Provision for loan losses 27,000 8,000 15,500 53,800   30,100

 

 

 

 

Net interest income after provision (14,849 ) 4,655 (1,414 ) (1,785 ) 27,466
 
Service charges on deposit accounts 630 690 714 2,609 2,984
Income from fiduciary activities 255 237 236 993 987
Gains on sales of loans originated for sale 49 123 144 713 554
Gains on sales of securities, net — —

2,896

1,108 5,152
Other than temporary impairment on securities (41 ) — (132 ) (41 ) (597 )
Other 588 650 604 2,451 2,502

 

 

 

Non-interest income 1,481 1,700 4,462 7,833 11,582
 
Salaries & employee benefits 3,134 3,780 3,176 15,218 14,903
Occupancy and equipment 819 957 988 3,729 4,095
Goodwill impairment — — — 23,794 —
Other real estate owned expense 7,020 17,029 9,859 47,525 16,254
FDIC insurance 830 930 705 3,470 2,971
Loan collection expense 520 802 360 2,509 908
Franchise tax 482 582 543 2,228 2,172
Professional fees 429 329 270 1,392 1,067
Communications expense 169 176 199 678 737
Borrowing prepayment fees 486 — — 486 —
Postage and delivery 117 117 153 485 722
Advertising 32 93 131 314 408
Other 658 628 583 2,445 2,241

 

 

 

Non-interest expense 14,696 25,423 16,967 104,273 46,478
 
Income (loss) before income taxes (28,064 ) (19,068 ) (13,919 ) (98,225 ) (7,430 )
Income tax expense (benefit) 18,591 (6,906 ) (4,989 ) (218 ) (3,046 )

 

 

 

Net income (loss) (46,655 ) (12,162 ) (8,930 ) (98,007 ) (4,384 )
Less:
Dividends on preferred stock 438 437 437 1,750 1,810
Accretion on preferred stock 44 45 45 177 177
Earnings (loss) allocated to participating shares (1,693 ) (463 ) (365 )   (3,732 )   (184 )
 
Net income (loss) to common shareholders $ (45,444 ) $ (12,181 ) $ (9,047 ) $ (96,202 ) $ (6,187 )

 

 

 

 
Weighted average shares – Basic 11,724,456 11,721,591 11,707,334 11,715,461 10,333,499
Weighted average shares – Diluted 11,724,456 11,721,591 11,707,334 11,715,461 10,333,499
 
Basic earnings (loss) per common share $ (3.88 ) $ (1.04 ) $ (0.77 ) $ (8.21 ) $ (0.60 )
Diluted earnings (loss) per common share $ (3.88 ) $ (1.04 ) $ (0.77 ) $ (8.21 ) $ (0.60 )
Cash dividends declared per common share $ 0.00 $ 0.00 $ 0.01 $ 0.02 $ 0.49

PORTER BANCORP, INC. AND SUBSIDIARY

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
12/31/11 9/30/11 12/31/10 12/31/11 12/31/10

 

 

 

Average Balance Sheet Data
Assets $ 1,569,753 $ 1,625,590 $ 1,716,430 $ 1,659,980 $ 1,747,648
Loans 1,189,163 1,227,024 1,317,606 1,243,484 1,353,295
Earning assets 1,463,133 1,506,384 1,564,243 1,534,885 1,618,541
Deposits 1,379,093 1,405,543 1,433,921 1,434,462 1,459,041
Long-term debt and advances 44,040 50,463 60,845 48,523 81,741
Interest bearing liabilities 1,320,481 1,361,537 1,402,052 1,386,740 1,450,133
Stockholders’ equity 130,333 151,055 201,478 159,455 188,015
 
 
Performance Ratios
Return on average assets (11.79) % (2.97) % (2.06) % (5.90) % (0.25) %
Return on average equity (142.02) (31.94) (17.58) (61.46) (2.33)
Yield on average earning assets (tax equivalent) 4.69 4.81 5.18 4.86 5.37
Cost of interest bearing liabilities 1.50 1.59 1.76 1.59 1.99
Net interest margin (tax equivalent) 3.34 3.38 3.60 3.43 3.59
Efficiency ratio 107.48 177.10 107.49 136.91 71.96
 
Loan Charge-off Data
Loans charged-off $ (18,718 ) $ (7,367 ) $ (10,638 ) $ (40,548 ) $ (22,461 )
Recoveries 103 142 31 340   254

 

 

 

 

Net charge-offs $ (18,615 ) $ (7,225 ) $ (10,607 ) $ (40,208 ) $ (22,207 )

PORTER BANCORP, INC. AND SUBSIDIARY

Unaudited Financial Information

(in thousands, except share and per share data)

 
As of As of As of
12/31/11 9/30/11 12/31/10

 

 

 

Assets
Loans $ 1,141,233 $ 1,206,341 $ 1,303,013
Loan loss reserve   (47,877 ) (39,492 ) (34,285 )

 

 

 

 

 

Net loans 1,093,356 1,166,849 1,268,728
Securities available for sale 158,833 158,813 106,309
Federal funds sold & interest bearing deposits 92,034 93,062 137,429
Cash and due from financial institutions 13,928 27,319 48,006
Premises and equipment 21,541 21,791 22,468
Other real estate owned 41,449 44,933 67,635
Goodwill — — 23,794
Deferred tax assets — 24,005 12,958
Accrued interest receivable and other assets   43,583 41,251 36,625

 

 

 

 

 

Total Assets $ 1,464,724 $ 1,578,023 $ 1,723,952

 

 

 

 

 

 
Liabilities and Equity
Certificates of deposit $ 1,024,333 $ 1,075,226 $ 1,166,820
Interest checking 87,653 77,229 87,690
Money market 64,302 79,790 80,082
Savings   36,357 36,508 34,678

 

 

 

 

 

Total interest bearing deposits 1,212,645 1,268,753 1,369,270
Demand deposits   111,118 104,694 98,398

 

 

 

 

 

Total deposits 1,323,763 1,373,447 1,467,668
Federal funds purchased & repurchase agreements 1,738 11,328 11,616
FHLB advances 7,116 13,155 15,022
Junior subordinated debentures 32,650 32,875 33,550
Accrued interest payable and other liabilities   7,628 8,000 6,681

 

 

 

 

 

Total liabilities 1,372,895 1,438,805 1,534,537
Stockholders’ equity   91,829 139,218 189,415

 

 

 

 

 

Total Liabilities and Stockholders’ Equity $ 1,464,724 $ 1,578,023 $ 1,723,952

 

 

 

 

 

 
Ending shares outstanding 11,824,472 11,830,581 11,846,107
Book value per common share $ 4.53 $ 8.53 $ 12.76
Tangible book value per common share 4.32 8.32 10.33
 
Asset Quality Data
Loan 90 days or more past due still on accrual $ 1,729 $ 655 $ 594
Non-accrual loans   67,166 59,132 59,799

 

 

 

 

 

Total non-performing loans 68,895 59,787 60,393
Real estate acquired through foreclosures 41,449 44,933 67,635
Other repossessed assets   5 19 52

 

 

 

 

 

Total non-performing assets $ 110,349 $ 104,739 $ 128,080

 

 

 

 

 

Non-performing loans to total loans 6.04 % 4.96 % 4.63 %
Non-performing assets to total assets 7.53 6.64 7.43
Allowance for loan losses to non-performing loans 69.49 66.05 56.77
Allowance for loan losses to total loans 4.20 3.27 2.63
 
Risk-based Capital Ratios
Tier I leverage ratio 7.13 % 9.72 % 11.08 %
Tier I risk-based capital ratio 9.99 13.13 14.39
Total risk-based capital ratio 11.97 15.07 16.32
 
FTE employees 291 298 286

CONTACT:
Porter Bancorp, Inc.
Maria L. Bouvette, 502-499-4800
President and CEO

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