Kentucky-based ""PBI Bank"":http://www.pbibank.com/ expects to enter into a consent order with the FDIC and the Kentucky Department of Financial Institutions, according to the bank's parent company, Porter Bancorp, Inc.
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The move will create benchmarks for the bank to improve its business, including enhancing asset quality, reducing loan concentrations, and maintaining capital levels.
""Like many banks across the nation, PBI had a challenging year in the aftermath of the recession that resulted in an increase in non-performing loans, charge-offs, and loan loss provision,"" said Maria L. Bouvette, president and CEO of Porter Bancorp, Inc.
[COLUMN_BREAK]""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,"" Bouvette explained.
She says the increased level of problem loans experienced by PBI and other banks has also led to increased oversight by bank regulators, and as a result, PBI Bank's board of directors has voluntarily agreed to take the steps to improve its portfolio.
""We have already adopted and implemented many of the actions prescribed in the consent order, and we are confident that our continued progress and execution of these plans and actions will result in a much stronger bank,"" Bouvette said.
According to Bouvette, Porter Bancorp raised more than $32 million in new capital last year.
""Our capital ratios are much stronger than many of our peer banks and exceed those specified in the consent order,"" she said. ""We believe our capital levels provide PBI Bank with a solid foundation to build on for our future.""