PBI Bank Expected to Enter Consent Order Agreement

Porter Bancorp anticipates its parent company PBI Bank to enter into a consent order with the Federal Deposit Insurance Corp. and the Kentucky Department of Financial Institution after a difficult year.

PBI Bank, Louisville, Ky., experienced an increase in nonperforming loans, charge-offs and loan loss provision in the aftermath of the economic recession.

“While most of these loans were made several years ago when the economy was much stronger, the increase in unemployment rates and depreciating real estate values since that time put more pressure on construction and land development loans where we have experienced a higher than normal loss rate,” said Maria Bouvette, president and CEO of Porter Bancorp.

The consent orders will help the bank improve its asset quality, reduce its loan concentrations and maintain its capital levels.

Bouvette added that bank regulators have placed more oversight on PBI because of the increased level of problem loans. The bank’s board of directors has already implemented actions related to the consent order hoping to create a “stronger bank” in the future.

The consent order does not affect the bank’s deposit customers, Bouvette said, as the bank will still be fully insured by the FDIC to the maximum amounts.

“Porter Bancorp raised $32 million in new capital last year and our capital ratios are much stronger than many of our peer banks and exceed those in the consent order,” Bouvette said. “We believe our capital levels provide PBI Bank with a solid foundation to build on for our future.”