Porter Bancorp, parent company of PBI Bank, entered into a $10 million secured loan agreement with First Merchants Bank of Muncie, IN, using the proceeds to strengthen the capital position of PBI Bank.

The company borrowed $10 million on June 30, 2017, and contributed $9 million of the proceeds to PBI Bank as common equity tier-1 capital. The remaining $1 million in proceeds were retained by the lender in an escrow to service quarterly interest payments.

Interest payments are payable quarterly at the rate of three-month LIBOR plus 250 basis points through June 30, 2020, at which time quarterly principal payments of $250,000 plus interest will commence.

The loan is due on June 30, 2022 and is secured by 100% of the issued and outstanding common stock of PBI Bank.

Porter Bancorp is a Louisville, KY-based bank holding company which operates banking centers in 12 counties through its wholly-owned subsidiary PBI Bank.