Limestone Bancorp (LMST) 8-K Porter Bancorp, Inc. Announces Second Quarter 2009 Results

Exhibit 99.1

Porter Bancorp, Inc. Announces Second Quarter 2009 Results

LOUISVILLE, Ky.--(BUSINESS WIRE)--July 15, 2009--Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, with 19 full-service banking offices in 11 counties in Kentucky, today reported results for the second quarter of 2009.

The Company reported net income of $3.2 million, or $0.33 per fully diluted common share, for the second quarter of 2009, compared with $4.0 million, or $0.48 per fully diluted common share, for the second quarter of 2008. Earnings for the six months ended June 30, 2009, were $6.3 million, or $0.64 per fully diluted common share, compared with $7.6 million, or $0.91 per fully diluted common share. The 2009 earnings per common share results included reductions of $481,000 and $963,000 for preferred stock dividends and accretion on the preferred stock for the second quarter and six month period, respectively. No comparable dividends were paid in the 2008 periods.

“Porter Bancorp reported growth in earnings and margins in the second quarter of 2009 compared with the first quarter of 2009,” stated Maria L. Bouvette, President and CEO of Porter Bancorp. “We also reported an improvement in asset quality over the first quarter as evidenced by an 18.3% drop in non-performing assets. In addition, we increased our reserves to 1.52% of loans at June 30, 2009, in light of the continued weakness in the economy and as part of our strategy to protect our capital base. Porter Bancorp continues to maintain its ‘well-capitalized’ position, the highest regulatory rating. Our total risk-based capital ratio of 13.9% for the holding company remains significantly above the 10.0% requirement for a well-capitalized institution.

“Our net interest income rose 7.0% to $12.8 million in the second quarter of 2009 compared with the second quarter of 2008 and benefited from the continued growth in earning assets,” continued Ms. Bouvette. “Although we reported solid growth in net income since the first quarter of 2009, Porter Bancorp’s net income of $3.2 million in the second quarter of 2009 was below last year’s level of $4.0 million due to a higher provision for loan losses and a significant increase in FDIC premiums and assessment fees. Our provision for loan losses rose $850,000 and FDIC premiums and assessments were up $1.0 million compared with the second quarter of 2008.”

Second Quarter Results

• Earnings per common share increased 6.5% to $0.33 in the second quarter of 2009 compared with $0.31 in the first quarter of 2009. The growth in earnings benefited from an increase in net interest income, but was partially off-set by a one-time FDIC special assessment of $781,000, that was equivalent to $0.06 per diluted common share.
• Net income was $3.2 million for the three months ended June 30, 2009, compared with $4.0 million for the second quarter of 2008. Earnings per diluted common share were $0.33 in the second quarter of 2009 compared with $0.48 per share in the second quarter of 2008. The 2009 earnings per common share results included deductions of approximately $0.06 per common share attributable to dividends and accretion on $35 million in preferred stock issued to the United States Treasury and $0.06 per common share due to the FDIC special assessment. There were no comparable preferred dividends or FDIC special assessment in the second quarter of 2008.
• Net interest margin increased 11 basis points to 3.13% in the second quarter of 2009 from 3.02% in the first quarter of 2009.
• Net interest income increased 7.0% to $12.8 million for the three months ended June 30, 2009, compared with the same quarter of 2008 and benefited from a 12.4% increase in average earning assets to $1.7 billion.
• Loans grew 1.4% to $1.4 billion, compared with $1.3 billion at June 30, 2008.
• Deposits increased 7.6% to $1.4 billion compared with $1.3 billion at June 30, 2008.
• Total assets increased 8.1% to $1.7 billion since the second quarter of 2008, due to growth in loans and the security portfolio.
• Nonperforming loans declined $5.5 million, or 22.3%, to $19.3 million in the 2009 second quarter compared with the first quarter of 2009. Non-performing assets declined $6.5 million, or 18.3%, to $28.9 million compared with the first quarter of 2009.
• Porter Bancorp’s stock was added to the Russell 2000 and Russell 3000 indexes effective June 29, 2009.

Net Interest Income

Net interest income increased 7.0% to $12.8 million for the three months ended June 30, 2009, an increase of $841,000, compared with $12.0 million for the same period in 2008. Net interest income rose 6.3% to $24.8 million for the six months ended June 30, 2009, an increase of $1.5 million, compared with $23.3 million for the same period in 2008. The increase in net interest income was primarily attributable to an increase in average earning assets and decreased cost of funds compared with 2008.

Net interest margin increased 11 basis points to 3.13% from 3.02% in the first quarter of 2009 due primarily to a lower cost of funds. The yield on earning assets declined 17 basis points from the first quarter of 2009 compared with a 31 basis point decline in rates paid on interest-bearing liabilities. Net interest margin decreased 16 basis points to 3.13% in the second quarter of 2009 from our margin of 3.29% in the second quarter of 2008 due primarily to earning assets repricing downward more quickly in the falling rate environment than cost of funds. The yield on earning assets declined 111 basis points from the 2008 second quarter, compared with a 96 basis point decline in rates paid on interest-bearing liabilities.

Average earning assets rose 12.4% to $1.7 billion for the three months ended June 30, 2009, compared with the $1.5 billion for the three months ended June 30, 2008. Average deposits increased 12.1% to $1.4 billion, up from $1.2 billion for the three months ended June 30, 2008. “We expect continued expansion in our margin next quarter since we are asset sensitive and our expectation of continued downward liability repricing with limited repricing of assets,” noted Ms. Bouvette.

Non-Interest Income

Non-interest income increased 6.0%, or $107,000, for the second quarter of 2009, compared with the second quarter of 2008. Non-interest income increased 27.5%, or $409,000, for the second quarter of 2009 compared with the linked first quarter of 2009. The increase in non-interest income was due to gains on sales of loans originated for sale, which were partially offset by lower service charges on deposit accounts and lower income from fiduciary activities. Our subsidiary, PBI Bank, began originating residential real estate loans for sale in the secondary market late in the first quarter of 2009. The Bank retained servicing rights for the sold loans. In addition, the loss on sales of securities experienced in the 2008 second quarter was not repeated in the 2009 second quarter.

Non-Interest Expense

Non-interest expense for the second quarter increased 16.8% from prior year second quarter. This was due primarily to increased FDIC insurance premiums which have risen significantly due to amendments made by the FDIC in 2007 to its risk-based deposit premium assessment system and to a one-time special assessment of $781,000 assessed in the 2009 second quarter and payable September 30, 2009. This special assessment increased our second quarter efficiency ratio 531 basis points to 55.94%. Without this special assessment, our second quarter efficiency ratio would have been 50.63%, an improvement from our ratio of 54.09% in the 2009 first quarter, and from our ratio of 50.70% in the 2008 second quarter.

Balance Sheet Review

Total assets increased 8.1%, or $128.3 million, to $1.7 billion at June 30, 2009, from $1.6 billion at June 30, 2008. The Company’s loan portfolio increased 1.4%, or $18.8 million, to $1.36 billion from $1.34 billion at June 30, 2008, primarily due to in-house loan origination efforts. Deposits at June 30, 2009 increased 7.6% to $1.4 billion from $1.3 billion at June 30, 2008, primarily due to an increase in both time deposits and transactional accounts from promotional efforts throughout the period. “Our loan growth slowed in the second quarter due to a general slowdown in economic activity in our markets,” noted Ms. Bouvette.

Asset Quality

Non-performing loans decreased to $19.3 million, or 1.42% of total loans, at June 30, 2009, compared with $24.8 million, or 1.81% of total loans, at March 31, 2009, and increased in comparison with $12.9 million, or 0.96% of total loans, at June 30, 2008. Foreclosed properties at June 30, 2009, were $9.6 million, compared with $10.5 million at March 31, 2009, and $6.6 million at June 30, 2008. Our ratio of non-performing assets to total assets decreased during the quarter to 1.69% at June 30, 2009, compared with 2.04% at March 31, 2009.

Our loan loss reserve as a percentage of total loans increased to 1.52% at June 30, 2009, compared with 1.35% at June 30, 2008. Net loan charge-offs for the second quarter of 2009 were $1.2 million, or 0.09% of average loans for the quarter.

“We remain focused on reducing our non-performing loans and foreclosed real estate to improve our credit quality, minimize losses and protect our capital base,” stated Ms. Bouvette. “Our improvement was due to normal progression of troubled loans through workout, collateral repossession and ultimate disposition. We continue to be proactive in managing Porter Bancorp in this challenging economic environment and believe our strengthened allowance for loan losses and strong capital base will be important buffers to possible further declines in the economy,” concluded Ms. Bouvette.

PBIB-G PBIB-F

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, 2009 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
	6/30/09		3/31/09		6/30/08			6/30/09		6/30/08
Income Statement Data
Interest income	$	23,645	$	23,502	$	25,041		$	47,147	$	50,715
Interest expense		10,832		11,535		13,069			22,367		27,400
Net interest income		12,813		11,967		11,972			24,780		23,315
Provision for loan losses		1,600		1,600		750			3,200		1,400
Net interest income after provision		11,213		10,367		11,222			21,580		21,915
Service charges on deposit accounts		788		688		902			1,476		1,731
Income from fiduciary activities		198		220		331			418		584
Gains on sales of loans originated for sale		241		-		-			241		-
Gains (losses) on sales of securities, net		-		1		(139	)		1		(45)
Other		668		577		694			1,245		1,336
Non-interest income		1,895		1,486		1,788			3,381		3,606
Salaries & employee benefits		3,813		3,878		3,892			7,691		7,716
Occupancy and equipment		981		998		904			1,979		1,817
FDIC insurance		503		459		242			962		463
FDIC special insurance assessment		781		-		-			781		-
Franchise tax		450		450		435			900		870
Professional fees		203		228		172			431		418
Postage and delivery		184		184		192			368		367
Communications expense		230		155		188			385		349
Advertising		125		158		140			283		301
Other real estate owned expense		226		127		120			353		347
Other		732		639		762			1,371		1,516
Non-interest expense		8,228		7,276		7,047			15,504		14,164
Income before income taxes		4,880		4,577		5,963			9,457		11,357
Income tax expense		1,635		1,516		1,990			3,151		3,787
Net income		3,245		3,061		3,973			6,306		7,570
Less:
Dividends on preferred stock		437		438		-			875		-
Accretion on preferred stock		44		44		-			88		-
Net income available to common	$	2,764	$	2,579	$	3,973		$	5,343	$	7,570
Weighted average shares - Basic		8,338,008		8,294,504		8,283,916			8,316,376		8,279,178
Weighted average shares – Diluted		8,338,008		8,294,504		8,283,916			8,316,376		8,279,178
Basic and diluted earnings per common share	$	0.33	$	0.31	$	0.48		$	0.64	$	0.91
Cash dividends declared per common 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
	6/30/09			3/31/09			6/30/08			6/30/09			6/30/08
Average Balance Sheet Data
Assets	$	1,734,866		$	1,696,575		$	1,563,635		$	1,715,826		$	1,538,440
Loans		1,360,191			1,360,193			1,326,996			1,360,192			1,298,407
Earning assets		1,659,389			1,621,569			1,475,812			1,640,583			1,454,928
Deposits		1,391,868			1,335,761			1,242,153			1,363,970			1,231,656
Long-term debt and advances		157,388			176,065			170,419			166,675			158,512
Interest bearing liabilities		1,456,778			1,422,584			1,334,128			1,439,776			1,311,140
Stockholders’ equity		167,168			165,756			126,211			166,466			125,117
Performance Ratios
Return on average assets		0.75	%		0.73	%		1.02	%		0.74	%		0.99	%
Return on average equity		7.79			7.49			12.66			7.64			12.17
Yield on average earning assets (tax equivalent)		5.74			5.91			6.85			5.82			7.04
Cost of interest bearing liabilities		2.98			3.29			3.94			3.13			4.20
Net interest margin (tax equivalent)		3.13			3.02			3.29			3.08			3.25
Efficiency ratio		55.94			54.09			50.70			55.06			52.53
Loan Charge-off Data
Loans charged-off	$	(1,300	)	$	(983	)	$	(798	)	$	(2,283	)	$	(1,217	)
Recoveries		69			102			114			171			188
Net charge-offs	$	(1,231	)	$	(881	)	$	(684	)	$	(2,112	)	$	(1,029	)

PORTER BANCORP, INC. AND SUBSIDIARY
Unaudited Financial Information
(in thousands, except share and per share data)
	As of			As of			As of			As of
	6/30/09			3/31/09			12/31/08			6/30/08
Assets
Loans	$	1,362,059		$	1,369,087		$	1,350,106		$	1,343,216
Loan loss reserve		(20,740	)		(20,371	)		(19,652	)		(18,133	)
Net loans		1,341,319			1,348,716			1,330,454			1,325,083
Securities available for sale		178,161			174,260			173,077			105,901
Federal funds sold & interest bearing deposits		79,284			72,766			38,189			28,970
Cash and due from financial institutions		17,844			49,873			14,957			31,870
Premises and equipment		23,412			22,396			22,543			22,988
Goodwill		23,794			23,794			23,794			23,877
Accrued interest receivable and other assets		45,994			46,588			44,843			42,861
Total Assets	$	1,709,808		$	1,738,393		$	1,647,857		$	1,581,550
Liabilities and Equity
Certificates of deposit	$	1,074,819		$	1,078,007		$	1,012,851		$	960,002
Interest checking		71,864			79,831			76,962			103,719
Money market		90,962			84,379			72,543			71,925
Savings		34,917			36,958			33,253			35,747
Total interest bearing deposits		1,272,562			1,279,175			1,195,609			1,171,393
Demand deposits		91,630			111,778			92,940			96,536
Total deposits		1,364,192			1,390,953			1,288,549			1,267,929
Federal funds purchased & repurchase agreements		11,232			12,534			10,084			10,753
FHLB advances		126,350			127,192			142,776			145,098
Junior subordinated debentures		34,000			34,000			34,000			25,000
Accrued interest payable and other liabilities		7,891			8,493			8,235			7,322
Total liabilities		1,543,665			1,573,172			1,483,644			1,456,102
Stockholders’ equity		166,143			165,221			164,213			125,448
Total Liabilities and Stockholders’ Equity	$	1,709,808		$	1,738,393		$	1,647,857		$	1,581,550
Ending shares outstanding		8,339,617			8,337,217			8,287,933			8,288,487
Book value per common share	$	15.73		$	15.62		$	15.59		$	15.14
Tangible book value per common share		12.52			12.38			12.33			11.93
Asset Quality Data
Loan 90 days or more past due still on accrual	$	8,405		$	10,002		$	11,598		$	4,974
Non-accrual loans		10,872			14,802			9,725			7,917
Total non-performing loans		19,277			24,804			21,323			12,891
Real estate acquired through foreclosures		9,551			10,470			7,839			6,625
Other repossessed assets		80			117			96			57
Total non-performing assets	$	28,908		$	35,391		$	29,258		$	19,573
Non-performing loans to total loans		1.42	%		1.81	%		1.58	%		0.96	%
Non-performing assets to total assets		1.69			2.04			1.78			1.24
Allowance for loan losses to non-performing loans		107.59			82.13			92.16			140.66
Allowance for loan losses to total loans		1.52			1.49			1.46			1.35
Risk-based Capital Ratios
Tier I leverage ratio		9.62	%		9.76	%		10.10	%		8.03	%
Tier I risk-based capital ratio		11.98			12.00			12.13			9.34
Total risk-based capital ratio		13.89			13.91			14.05			10.59
FTE employees		278			275			276			280

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