Porter Bancorp in of Louisville, Ky., has adopted a plan to preserve the value of its deferred tax benefits, designed to allow the company to continue the use of net operating loss carryforwards.

The $1 billion-asset company said the plan is designed to reduce the chance of a certain type of ownership change restricting Porter's ability to use its net operating loss carryforwards, according to a news release. If shareholders that own at least 5% of the company's stock were to increase their aggregate ownership of outstanding shares by more than 50 percentage points over a defined time period, that would trigger the type of ownership change that would limit Porter's usage of net operating loss carryforwards.

As part of the plan, Porter declared a dividend of one preferred stock purchase right for each share of common stock outstanding as of July 10. Effective June 26, any shareholder or group that acquires ownership of at least 5% of Porter's outstanding stock "could be subject to significant dilution" in its holdings, if Porter's board does not approve the acquisition.

"The primary purpose of the tax preservation plan is to protect the value of our NOLs for our shareholders," John Taylor, Porter's chief executive, said in a news release. "While our deferred tax asset is subject to a full valuation allowance, it remains very important to the Company."

Porter's board may also grant an exemption to certain transactions or certain persons, if their purchase of stock is determined to not jeopardize Porter's deferred tax assets.

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