Limestone Bancorp (LMST) 8-K Porter Bancorp, Inc. Announces Growth in Second Quarter Income, Loans and Deposits

Exhibit 99.1

Porter Bancorp, Inc. Announces Growth in Second Quarter Income, Loans and Deposits

LOUISVILLE, Ky.--(BUSINESS WIRE)--Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, with 20 full-service banking offices in 12 counties in Kentucky, today reported growth in net income, loans and deposits for the second quarter of 2008.

Net income rose to $4.0 million, or $0.51 per share, for the second quarter of 2008, compared with $3.7 million, or $0.49 per share, for the second quarter of 2007. Earnings for the six months ended June 30, 2008, increased to $7.6 million, or $0.97 per fully diluted share, compared with $7.3 million, or $0.96 per fully diluted share, for the same period of 2007.

“We experienced solid growth in loans, deposits and assets during the second quarter of 2008,” stated Maria L. Bouvette, President and CEO of Porter Bancorp, Inc. “Our improvement in net income reflected growth in earning assets, non-interest income and margins. We also benefited from the expansion of existing markets and the contribution from acquisitions completed over the past year. We remain well positioned to improve earnings as interest rates stabilize and we continue to streamline our operational efficiency,” continued Ms. Bouvette.

Highlights

• Net income increased 7.7% to $4.0 million for the three months ended June 30, 2008, compared with the same quarter of 2007. Earnings per diluted share increased 10.9% to $0.51 for the three months ended June 30, 2008 compared to the first quarter of 2008.
• Net interest income increased 18.3% to $12 million for the three months ended June 30, 2008, compared with the same quarter of 2007.
• Loans grew 36.6% to $1.3 billion compared with $983 million at June 30, 2007.
• Deposits increased 29.8% to $1.3 billion compared with $977 million at June 30, 2007. Core customer non-interest bearing deposit accounts increased 31.8% to $96.5 million from $73.3 million at June 30, 2007.
• Total assets increased 32.0% to $1.6 billion since the second quarter of 2007, fueled by strong loan growth and the acquisitions of Kentucky Trust Bank and Paramount Bank.
• Efficiency ratio improved on a linked quarter basis to 50.7% for the three months ended June 30, 2008.
• Net interest margin improved eight basis points on a linked quarter basis to 3.29% in the second quarter of 2008.
• Capital was strengthened with the sale of a $9 million subordinated capital note by our bank subsidiary, PBI Bank, on July 1, 2008. The capital note, which qualifies as Tier 2 capital, will provide funding for continued loan growth and maintain the bank’s strong capital position without being dilutive to common shareholders of Porter Bancorp.

“We are pleased with our solid performance in the second quarter,” continued Ms. Bouvette. “Our loan growth benefited from the strength of our local markets and increased market share arising from our acquisitions of Kentucky Trust Bank and Paramount Bank. These factors also contributed to growth in deposits and higher non-interest income generated from service charges and trust activities. We also opened a new office in Shepherdsville in June.

“Asset quality remains a top priority to protect future earnings and our capital base. We continue to focus on lending to our traditional customer base in Kentucky. We remain very proactive in managing our credit risks and believe Porter Bancorp is in a solid position to weather the softening economy,” continued Ms. Bouvette.

Net Interest Income

Net interest income increased 18.3% to $12.0 million for the three months ended June 30, 2008, an increase of $1.9 million, compared with $10.1 million for the same period in 2007. Net interest income rose 17.4% to $23.3 million for the six months ended June 30, 2008, an increase of $3.4 million, or 17.4%, compared with $19.9 million for the same period in 2007. This increase was attributable to the organic growth in our loan portfolio and the Kentucky Trust Bank and Paramount Bank acquisitions, offset somewhat by lower net interest margin compared with the same period in 2007.

Net interest margin for the second quarter of 2008 declined 40 basis points to 3.29% compared with 3.69% for the second quarter of 2007. Net interest margin improved eight basis points from our margin of 3.21% in the first quarter of 2008 due primarily to lower funding costs. During the second quarter of 2008, our margin improved as our deposits continued to reprice at lower rates relative to the repricing of our loan portfolio. If interest rates remain stable, we expect steady expansion of our net interest margin in the second half of the year based upon our expectation of continued downward repricing of liabilities with limited repricing of assets.

Non-Interest Income

Non-interest income for the second quarter of 2008 increased 36.8%, or $481,000, over the second quarter of 2007. Non-interest income was $3.6 million in the first six months of 2008 compared with $2.5 million for the same period of 2007. The growth in non-interest income since last year was primarily attributable to higher service charges on deposit accounts and income from fiduciary activities. Porter added income from fiduciary activities as a result of the acquisition of the trust operation from Kentucky Trust Bank on October 1, 2007. Income from fiduciary activities added $331,000 and $584,000 to non-interest income in the second quarter and first six months of 2008, respectively. This was offset somewhat by a $139,000 loss on the sale of securities in the second quarter of 2008 compared with a gain of $62,000 in the same quarter of 2007.

Non-Interest Expense

Non-interest expense for the second quarter increased 37.9% from prior year second quarter. Non-interest expense for the six months ended June 30, 2008, increased 40.8% from the six months ended June 30, 2007. These increases were due primarily to costs related to the acquisitions of Kentucky Trust Bank and Paramount Bank, increased salaries and benefits for existing employees and higher occupancy and equipment expense to support the six additional offices. Expenses also increased because FDIC insurance premiums rose significantly due to amendments made by the FDIC in 2007 to its risk-based deposit premium assessment system. Our efficiency ratio increased to 52.5% for the first six months of 2008 compared with 45.2% for the same period in 2007, but improved on a linked-quarter basis to 50.7% for the three months ended June 30, 2008.

Balance Sheet Review

Total assets increased 32.0%, or $383 million, to $1.6 billion at June 30, 2008, from $1.2 billion at June 30, 2007. The Company’s loan portfolio increased 36.6%, or $360 million, to $1.3 billion from $983 million at June 30, 2007, primarily due to in-house loan origination efforts and the acquisitions of Kentucky Trust Bank and Paramount Bank. Deposits at June 30, 2008, increased 29.8% to $1.3 billion from $977 million at June 30, 2007, primarily due to an increase in both time deposits and transactional accounts from promotional efforts throughout the period, and the Kentucky Trust Bank and Paramount Bank acquisitions.

Asset Quality

“Our non-performing assets increased in the second quarter due to the softening economy,” continued Ms. Bouvette. “Our nonperforming loans at June 30, 2008, were $12.9 million, or 0.96% of total loans, compared with $10.1 million, or 0.77% of total loans at March 31, 2008, and $7.2 million, or 0.73% of total loans at June 30, 2007. The $2.8 million increase in nonperforming loans since the prior quarter end reflects the normal progression of troubled loans through workout, collateral repossession and ultimate disposition. Foreclosed properties at June 30, 2008, were $6.6 million compared with $4.1 million at June 30, 2007, and $7.1 million at March 31, 2008. Additionally, our ratio of non-performing assets to total assets increased during the quarter to 1.24% at June 30, 2008, compared with 1.10% at March 31, 2008.”

Our loan loss reserve as a percentage of total loans at June 30, 2008 decreased slightly to 1.35% from 1.37% at March 31, 2008 and at June 30, 2007. Net loan charge-offs for the second quarter of 2008 were $684,000, or 0.05% of average loans for the quarter. Ms. Bouvette stated “We believe our 1.35% ratio of allowance of loan losses to total loans and coverage ratio of 140.66% for allowance for loan losses to non-performing loans provides a solid measure of protection for Porter Bancorp. We remain confident of our continuing ability to manage our risks during this difficult credit cycle. Our focus is on minimizing losses by quickly resolving credit issues as soon as they are identified.”

PBIB-G

Forward-Looking Statements

Statements in this press release relating to Porter Bancorp’s plans, objectives, expectations or future performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations. Porter Bancorp’s actual results in future periods may differ materially from those currently expected due to various risks and uncertainties, including those discussed under “Risk Factors” in the Company’s Form 10-K and subsequent periodic reports filed with the Securities and Exchange Commission. The forward-looking statements in this press release are made as of the date of the release and Porter Bancorp does not assume any responsibility to update these statements.

Additional Information

Unaudited supplemental financial information for the second quarter ending June 30, 2008 follows.

PORTER BANCORP, INC. AND SUBSIDIARY Unaudited Financial Information (in thousands, except share and per share data)
	Three			Three		Three		Six			Six
	Months			Months		Months		Months			Months
	Ended			Ended		Ended		Ended			Ended
	6/30/08			3/31/08		6/30/07		6/30/08			6/30/07
Income Statement Data
Interest income	$	25,041		$	25,674	$	21,935	$	50,715		$	41,989
Interest expense		13,069			14,331		11,815		27,400			22,125
Net interest income		11,972			11,343		10,120		23,315			19,864
Provision for loan losses		750			650		700		1,400			1,325
Net interest income after provision		11,222			10,693		9,420		21,915			18,539
Service charges on deposit accounts		902			829		648		1,731			1,183
Income from fiduciary activities		331			253		-		584			-
Gains (losses) on sales of securities, net		(139	)		94		62		(45	)		62
Other		694			642		597		1,336			1,232
Non-interest income		1,788			1,818		1,307		3,606			2,477
Salaries & employee benefits		3,892			3,824		3,001		7,716			5,936
Occupancy and equipment		904			913		599		1,817			1,164
Franchise tax		435			435		325		870			650
FDIC insurance		242			221		26		463			51
Professional fees		172			246		184		418			336
Communications expense		188			161		99		349			209
Advertising		140			161		114		301			253
Other real estate owned expense		120			227		53		347			95
Other		954			929		709		1,883			1,366
Non-interest expense		7,047			7,117		5,110		14,164			10,060
Income before income taxes		5,963			5,394		5,617		11,357			10,956
Income tax expense		1,990			1,797		1,928		3,787			3,666
Net income	$	3,973		$	3,597	$	3,689	$	7,570		$	7,290
Weighted average shares - Basic		7,826,567			7,839,365		7,586,167		7,832,966			7,584,502
Weighted average shares - Diluted		7,826,567			7,839,365		7,586,247		7,832,969			7,584,507
Basic and diluted earnings per share	$	0.51		$	0.46	$	0.49	$	0.97		$	0.96
Cash dividends declared per share	$	0.21		$	0.21	$	0.20	$	0.42		$	0.40

PORTER BANCORP, INC. AND SUBSIDIARY Unaudited Financial Information (in thousands, except share and per share data)
	Three			Three			Three			Six			Six
	Months			Months			Months			Months			Months
	Ended			Ended			Ended			Ended			Ended
	6/30/08			3/31/08			6/30/07			6/30/08			6/30/07
Average Balance Sheet Data
Assets	$	1,563,635		$	1,513,245		$	1,161,738		$	1,538,440		$	1,114,578
Loans		1,326,996			1,269,818			955,896			1,298,407			923,921
Earning assets		1,475,812			1,434,044			1,110,384			1,454,928			1,063,932
Deposits		1,242,153			1,221,159			939,634			1,231,656			907,778
Long-term debt and advances		170,419			146,605			101,648			158,512			87,330
Interest bearing liabilities		1,334,128			1,288,152			974,738			1,311,140			928,511
Stockholders’ equity		126,211			124,023			112,672			125,117			111,460
Performance Ratios
Return on average assets		1.02	%		0.96	%		1.27	%		0.99	%		1.32	%
Return on average equity		12.66			11.66			13.13			12.17			13.19
Yield on average earning assets (tax equivalent)		6.85			7.20			7.96			7.04			7.99
Cost of interest bearing liabilities		3.93			4.47			4.86			4.20			4.81
Net interest margin (tax equivalent)		3.29			3.21			3.69			3.25			3.80
Efficiency ratio		50.70			54.47			44.97			52.53			45.15
Loan Charge-off Data
Loans charged-off	$	(798	)	$	(419	)	$	(512	)	$	(1,217	)	$	(826	)
Recoveries		114			74			80			188			148
Net charge-offs	$	(684	)	$	(345	)	$	(432	)	$	(1,029	)	$	(678	)

PORTER BANCORP, INC. AND SUBSIDIARY Unaudited Financial Information (in thousands, except share and per share data)
	As of			As of			As of			As of
	6/30/08			3/31/08			12/31/07			6/30/07
Assets
Loans	$	1,343,216		$	1,314,075		$	1,217,698		$	983,343
Loan loss reserve		(18,133	)		(18,067	)		(16,342	)		(13,479	)
Net loans		1,325,083			1,296,008			1,201,356			969,864
Securities available for sale		105,901			123,560			128,036			101,733
Federal funds sold & interest bearing deposits		28,970			1,285			19,979			49,293
Cash and due from financial institutions		31,870			55,376			23,608			15,821
Premises and equipment		22,988			22,413			21,279			14,414
Goodwill		23,877			23,504			18,174			12,881
Accrued interest receivable and other assets		42,861			42,592			43,588			34,176
Total Assets	$	1,581,550		$	1,564,738		$	1,456,020		$	1,198,182
Liabilities and Equity
Certificates of deposit	$	960,002		$	916,560		$	846,568		$	727,053
Interest checking		103,719			97,834			95,953			44,573
Money market		71,925			91,825			99,839			106,691
Savings		35,747			35,469			28,661			25,379
Total interest bearing deposits		1,171,393			1,141,688			1,071,021			903,696
Demand deposits		96,536			95,163			95,533			73,265
Total deposits		1,267,929			1,236,851			1,166,554			976,961
Federal funds purchased & repurchase agreements		10,753			24,706			11,285			1,491
FHLB advances		145,098			146,021			121,767			76,479
Junior subordinated debentures		25,000			25,000			25,000			25,000
Accrued interest payable and other liabilities		7,322			7,415			9,125			6,397
Total liabilities		1,456,102			1,439,993			1,333,731			1,086,328
Stockholders’ equity		125,448			124,745			122,289			111,854
Total Liabilities and Stockholders’ Equity	$	1,581,550		$	1,564,738		$	1,456,020		$	1,198,182
Ending shares outstanding		7,893,797			7,863,745			7,881,206			7,629,102
Book value per share	$	15.89		$	15.86		$	15.52		$	14.66
Tangible book value per share		12.53			12.26			12.80			13.01
Asset Quality Data
Loan 90 days or more past due still on accrual	$	4,974		$	3,301		$	2,145		$	1,485
Non-accrual loans		7,917			6,808			10,524			5,704
Total non-performing loans		12,891			10,109			12,669			7,189
Real estate acquired through foreclosures		6,625			7,140			4,309			4,118
Other repossessed assets		57			32			30			9
Total non-performing assets	$	19,573		$	17,281		$	17,008		$	11,316
Non-performing loans to total loans		0.96	%		0.77	%		1.04	%		0.73	%
Non-performing assets to total loans		1.46			1.32			1.40			1.15
Non-performing assets to total assets		1.24			1.10			1.17			0.94
Allowance for loan losses to non-performing loans		140.66			178.72			128.99			187.49
Allowance for loan losses to total loans		1.35			1.37			1.34			1.37
Risk-based Capital Ratios
Tier I leverage ratio		8.03	%		8.14	%		9.07	%		10.82	%
Tier I risk-based capital ratio		9.34			9.35			10.39			12.64
Total risk-based capital ratio		10.59			10.60			11.64			13.89
FTE employees		280			290			273			233

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CONTACT:
Porter Bancorp, Inc.
Maria L. Bouvette, President and CEO, 502-499-4800