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Ailing Palmetto Bancshares Inc. in Greenville, S.C., will shutter more branches and eliminate more jobs as it struggles to return to profitability.
December 15
Palmetto Bancshares (PLMT) in Greenville, S.C., is shedding more than $40 million of problem loans as part of its ongoing effort to clean up its balance sheet and return to profitability. The $1.2 billion-asset parent of the Palmetto Bank said in a a Securities and Exchange Commission filing Wednesday that it has agreed to sell $23.2 million of loans in a bulk sale marketed through the Debt Exchange and another $17.1 million of loans to individual investors.
Palmetto expects to take a $15.1 million loss on the sales, but said the decision to unload the loans at a discount increases its chances of achieving its stated goal of turning a quarterly profit in 2012. Palmetto has lost roughly $130 million over the last three years as it has struggled with defaults on real estate loans.
"The sales of these problem assets are also expected to result in greater stability and predictability in future earnings through a reduction in exposure to changes in real estate values and related operating costs," Palmetto said in the filing.
The company also announced in the SEC filing that it has sold nearly $110 million in investment securities to help offset losses on problem loans. Factoring in the $8.5 million gain on the sale of securities and the $15.1 million loss on the sale of problem loans, Palmetto expects to report a loss of between $4 million and $6 million for the quarter that ends June 30.