Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, with 18 full-service banking offices in Kentucky, today reported results for the second quarter of 2011.
The Company reported a net loss to common shareholders of $39.0 million, or $(3.33) per diluted share, for the second quarter of 2011. Net loss to common shareholders for the six months ended June 30, 2011 was $38.6 million, or $(3.30) per fully diluted common share. Our loss was a direct result of a strategy change undertaken in the second quarter to more aggressively dispose of certain non-performing assets and the write-off of our goodwill. Our change in strategy for disposal of certain non-performing assets is reflected in the $22.1 million other real estate expense and provision for loan losses of $13.7 million, which exceed our net charge-offs for the quarter by $5.1 million. The goodwill impairment charge does not affect cash flows, liquidity, regulatory capital, regulatory capital ratios or the Company’s future operations and was recorded principally due to the decline in the Company’s stock price.
During the second quarter, management, with concurrence of the Board of Directors, determined that certain properties held in other real estate were not likely to be successfully disposed of in an acceptable time-frame using routine marketing efforts. It became apparent that certain condominium projects were going to require extended holding periods to sell the properties at recent appraised values. Accordingly, during June, the Company sold, in a single transaction, 54 finished condominium property units from several condominium developments in our OREO portfolio, with a carrying value of approximately $11.0 million for $5.2 million, resulting in a pre-tax loss of $5.8 million. In addition, management adjusted its valuations for similar properties held in other real estate through provision of an allowance of $10.6 million on other real estate held, with the objective of marketing these properties more aggressively. During the quarter the Company also recorded additional write-downs on real estate owned due to lower valuations reflected in updated appraisals.
|A summary of other real estate owned expense follows (in thousands):|
|Loss on sale of other real estate||$||6,485|
|Allowance provided on other real estate due to strategy change||10,600|
|Write-downs of other real estate||4,351|
|Costs to administer other real estate||673|
These actions led to a substantial improvement in our asset quality measurements. Non-performing assets fell from $143.9 million at March 31, 2011 to $111.4 million at June 30, 2011, a decline of $32.4 million. Comparing the same periods, the ratio of non-performing assets to total assets fell from 8.28% to 6.65%, the allowance for loan losses to total loans moved from 2.63% to 3.10%, and the allowance for loan losses to non-performing loans increased from 48.09% to 62.98%.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV