Porter Bancorp put on a ‘distressed company watch’
The folks over at Louisville’s Porter Bancorp might not want to buy any green bananas right about now. According to a new report they are on a “distressed company” list, meaning they may not be here for too many more Christmases.
The site, The Middle Market, put Porter on its list of distressed companies on Nov. 11.
And Porter, the bank holding company for PBI Bank, made the list.
Why? It’s fair to say Porter has had problems. As of late August it owed $35 million in TARP funds. It’s been embroiled in a series of complicated, and, frankly, bizarre lawsuits, including one that alleged it required a client to take over a pizza parlor.
Its stock share price has sunk to a recent low of 74 cents, as of the end of Nov. 14. Mind you, it once traded north of $20 per share.
But we think the trouble the site is referring to is its Oct. 29 need to restate its most recent quarterly financial numbers. Restate them for the worse, of course.
According to a release by the firm, this will have the effect of restating the company’s reported net losses attributable to common shareholders from $672,000 to $6.33 million for the three months ending June 30, 2014. It also has to restate its half-yearly losses from $1.6 million to $7.3 million.
Oy! Its losses were almost 4.5 times worse than previously reported! Then it adds: “Management has determined that a material weakness existed in the Company’s internal control over its financial reporting at June 30, 2014.”
You don’t say.
Porter says the restatement related to commercial real estate it acquired through a legal settlement from a borrower with which the bank had been in “contentious collection litigation.” They priced the value of the real estate at what they say was its estimated fair value to sell, minus costs. Porter says this valuation was based on financial information available through the filing of its June 30, 2014, financial statements.
But these estimations were not even close to the value of the real estate, Porter now admits. “Due to the adversarial nature of the litigation, the Bank had been unable to obtain information material to the valuation of the real estate until it took possession shortly before the end of the second quarter of 2014.”
Hear that? The litigation was adversarial. Isn’t all litigation, by definition, adversarial? And because of that, Porter says it got a whole bag of trash not even worth the bag.
Mind you, this is a bank. Adding up numbers, calculating risk, and valuing assets is what they do, all day every day. If they can’t even begin to do it for themselves how much confidence can that inspire in any potential client?
The Rush Inn Bar & Grill, a fixture on Lower Brownsboro Road for decades, is up for sale.
The tan brick building, built in 1885 on the corner of Brownsboro Road and Mellwood Avenue, went on the market this fall for a total $545,000 asking price. It’s zoned C-1 – restricted commercial use – but has always been a restaurant and/or bar.
The gabled, yellow brick building directly across the street is the restaurant Bistro 1860 (formerly the L&N Wine Bistro and, before that, Wheeler’s Roadhouse).
The owner of Rush Inn, Jeff Rand, is selling both the building and the business – the building for $460,000, the business for $85,000.
The Rand family has been running the business since 1985. For most of its 130 years, the historic building has served as a watering hole. (During Prohibition, 1920-1933, it was converted into a Presbyterian church – then converted back almost immediately upon repeal of the 18th Amendment.)
Mike Helline of The Grisanti Group is the agent for the sale.