Porter Bancorp (PBIB) in Louisville, Ky., is back in the red after posting a profit in the first quarter.

The $1.3 billion-asset company reported late Thursday a second-quarter loss of $319,000, compared to a profit of $985,000 in the first quarter. It posted a loss $39 million in the second quarter of 2011 because of a large goodwill impairment charge and real estate owned expenses.

Porter reported net interest income of $10.8 million, down 5% from the first quarter. The company attributed the decline to a smaller loan book and a shrinking net interest margin, which was 3.35%, down 10 basis points from the first quarter.

Porter's provision for loan losses was $4 million, up 6.6% from the first quarter. Net charge-offs were $6.3 million, up 173% from the first quarter.

The quarter-over-quarter change was also driven by a smaller gain on securities sales. Porter booked $1.5 million in gains in the second quarter, compared to $2 million in the first quarter.  

After weathering most of the financial downturn, Porter began to show signs of struggle last year. At June 30, nonperforming assets totaled $136.1 million, or 10.2% of total assets. Nonperformers increased 22.5% from a year earlier, but only 2.4% from the first quarter.

In a research note on Friday, Sandler O'Neill analyst Kevin Fitzsimmons noted the mix of nonperforming assets: other real estate owned ticked up from 26% of nonperforming assets in the first quarter to about 40% in the second quarter.

The company's PBI Bank unit is also out of compliance with a consent order with regulators, which called for the bank to have leverage ratio of 9% and a total risk-based capital ratio of 12%. At June 30, those ratios were 7.38% and 11.71% respectively.

"We are continuing our efforts to strengthen our capital levels and comply with the consent order," the company said in its press release.

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