Shareholder Says Porter Bancorp Is Understating Loan Troubles
Kline, Alan, American Banker
Byline: Alan Kline
Porter Bancorp Inc.'s largest outside shareholder says that the Louisville, Ky., company continues understate its level of problem loans despite its recent claims that its allowance for loan losses is sufficient.
In a letter to the company's board filed with the Securities and Exchange Commission Monday, Clinton Group Inc. of New York also demanded a management change, arguing that the $1.5 billion-asset company "has lost all credibility with investors."
Responding to earlier concerns from Clinton, Porter's board conducted an examination of the company's allowance for loan losses and concluded in mid-November that its accounting methods are sound.
But Clinton, which owns roughly 9.4% of Porter's outstanding shares, claimed in Monday's letter that the board's conclusions are incorrect and that Porter "continues to obfuscate problem assets on its balance sheet, [threatening] the safety and soundness" of its PBI Bank.
Porter set aside roughly $27 million for loan losses through the first nine months of 2011, compared to $14. …