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Porter Bancorp (PBIB) of Louisville, Ky., did not have to look far to find the new leader for its struggling bank.
July 19
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.
