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

Exhibit 99.1

Porter Bancorp, Inc. Announces Third Quarter 2009 Results

Reports Strong Growth in Margin and Net Income

Compared with Linked Second Quarter 2009

LOUISVILLE, Ky.--(BUSINESS WIRE)--October 15, 2009--Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, with 18 full-service banking offices in 11 counties in Kentucky, today reported results for the third quarter of 2009.

The Company reported net income of $4.5 million, or $0.49 per fully diluted common share, for the third quarter of 2009, compared with $4.1 million, or $0.50 per fully diluted common share, for the third quarter of 2008. Earnings for the nine months ended September 30, 2009, were $10.8 million, or $1.13 per fully diluted common share, compared with $11.7 million, or $1.41 per fully diluted common share, for the same period of 2008.

“Porter Bancorp reported growth in net interest income and net income in the third quarter of 2009 compared with the second quarter of 2009,” stated Maria L. Bouvette, President and CEO of Porter Bancorp. “We benefited from an increase in our net interest margin, higher non-interest income and lower expenses compared with the second quarter. Our increased profitability was also highlighted by an improvement in our efficiency ratio to 47.14%, our best result in eight quarters.

“We remained focused on our asset quality due to the soft economy and strengthened our allowance for loan losses to 1.58% at the end of the third quarter,” continued Ms. Bouvette. “We continued building our reserves 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 13.8% for the holding company remains significantly above the 10.0% requirement for a well-capitalized institution.”

Third Quarter Results

• Earnings per common share increased 48.5% to $0.49 in the third quarter of 2009 compared with $0.33 in the second quarter of 2009. The growth in earnings benefited from an increase in net interest income, and non-interest income and a decrease in non-interest expense. Second quarter 2009 non-interest expense included a special FDIC assessment of $781,000, equivalent to $0.06, net of tax, per diluted common share, which was not repeated in the 2009 third quarter.
• Net interest margin increased 46 basis points to 3.59% in the third quarter of 2009 from 3.13% in the second quarter of 2009.
• Net income was $4.5 million for the three months ended September 30, 2009, compared with $4.1 million for the third quarter of 2008. Earnings per diluted common share were $0.49 in the third quarter of 2009 compared with $0.50 per share in the third 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. There were no comparable preferred dividends in the third quarter of 2008.
• Net interest income increased 15.6% to $14.4 million for the three months ended September 30, 2009, compared with the same quarter of 2008.

• Efficiency ratio improved to 47.14% for the three months ended September 30, 2009, compared with 55.94% for the second quarter of 2009.
• Loans grew 3.3% to $1.4 billion, compared with $1.3 billion at September 30, 2008.
• Deposits increased 8.4% to $1.4 billion compared with $1.3 billion at September 30, 2008.
• Total assets increased 8.3% to $1.7 billion since the third quarter of 2008, due to growth in loans and the security portfolio.
• Nonperforming loans increased $7.0 million, or 36.2%, to $26.3 million in the 2009 third quarter compared with the second quarter of 2009. Non-performing assets increased $10.4 million, or 35.8%, to $39.3 million compared with the second quarter of 2009.

Net Interest Income

Net interest income increased 15.6% to $14.4 million for the three months ended September 30, 2009, an increase of $1.9 million, compared with $12.4 million for the same period in 2008. Net interest income rose 9.5% to $39.2 million for the nine months ended September 30, 2009, an increase of $3.4 million, compared with $35.7 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 46 basis points to 3.59% from 3.13% in the second quarter of 2009 due primarily to lower cost of funds. The yield on earning assets increased 19 basis points from the second quarter of 2009 and rates paid on interest-bearing liabilities decreased 31 basis points. Net interest margin increased 26 basis points to 3.59% in the third quarter of 2009 from our margin of 3.33% in the third quarter of 2008 due primarily to lower cost of funds. The yield on earning assets declined 77 basis points from the 2008 third quarter, compared with a 105 basis point decline in rates paid on interest-bearing liabilities.

Average earning assets rose 6.8% to $1.6 billion for the three months ended September 30, 2009, compared with the $1.5 billion for the three months ended September 30, 2008. Average deposits increased 9.4% to $1.4 billion, up from $1.3 billion for the three months ended September 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 18.0%, or $311,000, to $2.0 million for the third quarter of 2009, compared with the third quarter of 2008. The increase in non-interest income was due to gains on sales of securities and 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. Loans sold generated $82,000 in income in the third quarter of 2009 and $323,000 for the first nine months of 2009. The Bank retained servicing rights for the sold loans.

Non-Interest Expense

Non-interest expense for the third quarter increased 12.0% from the prior year third quarter. This was due primarily to increased FDIC insurance premiums. FDIC insurance premiums have risen significantly due to amendments made by the FDIC in 2007 to its risk-based deposit premium assessment system. FDIC premiums more than doubled to $626,000 in the third quarter of 2009 from $284,000 in the third quarter of 2008. Our efficiency ratio continues to outperform our peers at 47.14% for the third quarter of 2009 and improved from 47.47% in the third quarter of 2008.

Balance Sheet Review

Total assets increased 8.3%, or $132.6 million, to $1.7 billion at September 30, 2009, from $1.6 billion at September 30, 2008. The Company’s loan portfolio increased 3.3%, or $44.9 million, to $1.39 billion from $1.34 billion at September 30, 2008, primarily due to in-house loan origination efforts. Deposits at September 30, 2009, increased 8.4% to $1.4 billion from $1.3 billion at September 30, 2008, primarily due to an increase in both time deposits and transactional accounts from promotional efforts throughout the period.

Asset Quality

Non-performing loans increased to $26.3 million, or 1.89% of total loans, at September 30, 2009, compared with $19.3 million, or 1.42% of total loans, at June 30, 2009, and increased in comparison with $15.4 million, or 1.15% of total loans, at September 30, 2008. Foreclosed properties at September 30, 2009, were $12.9 million, compared with $9.6 million at June 30, 2009, and $7.5 million at September 30, 2008. Our ratio of non-performing assets to total assets increased during the quarter to 2.27% at September 30, 2009, compared with 1.69% at June 30, 2009.

Our loan loss reserve as a percentage of total loans increased to 1.58% at September 30, 2009, compared with 1.39% at September 30, 2008. Net loan charge-offs for the third quarter of 2009 were $782,000, or 0.06% of average loans for the quarter.

“The majority of the increase in non-performing loans is attributable to residential real estate construction and development loans that have been affected by the weak economy,” stated Ms. Bouvette. “We have increased our reserves to account for these loans and remain very proactive in working through problem loans to minimize future losses. We believe that our strengthened allowance for loan losses and strong capital base will be important buffers against possible continued weakness 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 third quarter ending September 30, 2009 follows.

PORTER BANCORP, INC. AND SUBSIDIARY Unaudited Financial Information (in thousands, except share and per share data)
	Three		Three		Three			Nine		Nine
	Months		Months		Months			Months		Months
	Ended		Ended		Ended			Ended		Ended
	9/30/09		6/30/09		9/30/08			9/30/09		9/30/08
Income Statement Data
Interest income	$	23,802	$	23,645	$	25,106		$	70,949	$	75,821
Interest expense		9,428		10,832		12,673			31,795		40,073
Net interest income		14,374		12,813		12,433			39,154		35,748
Provision for loan losses		2,000		1,600		1,250			5,200		2,650
Net interest income after provision		12,374		11,213		11,183			33,954		33,098
Service charges on deposit accounts		843		788		876			2,319		2,607
Income from fiduciary activities		227		198		261			645		845
Gains on sales of loans originated for sale		82		241		-			323		-
Gains (losses) on sales of securities, net		321		-		(101	)		322		(146)
Other		563		668		689			1,808		2,025
Non-interest income		2,036		1,895		1,725			5,417		5,331
Salaries & employee benefits		3,799		3,813		3,666			11,490		11,382
Occupancy and equipment		993		981		882			2,972		2,699
FDIC insurance		626		503		284			1,588		747
FDIC special insurance assessment		-		781		-			781		-
Franchise tax		450		450		435			1,350		1,305
Other real estate owned expense		353		226		109			706		456
Professional fees		175		203		177			606		595
Communications expense		183		230		181			568		530
Postage and delivery		193		184		201			561		568
Advertising		121		125		100			404		401
Other		691		732		734			2,062		2,250
Non-interest expense		7,584		8,228		6,769			23,088		20,933
Income before income taxes		6,826		4,880		6,139			16,283		17,496
Income tax expense		2,290		1,635		2,039			5,441		5,826
Net income		4,536		3,245		4,100			10,842		11,670
Less:
Dividends on preferred stock		437		437		-			1,312		-
Accretion on preferred stock		44		44		-			132		-
Net income available to common	$	4,055	$	2,764	$	4,100		$	9,398	$	11,670
Weighted average common shares - Basic		8,339,323		8,338,008		8,288,200			8,324,109		8,282,214
Weighted average common shares – Diluted		8,339,323		8,338,008		8,288,200			8,324,109		8,282,214
Basic and diluted earnings per common share	$	0.49	$	0.33	$	0.50		$	1.13	$	1.41
Cash dividends declared per common share	$	0.21	$	0.21	$	0.20		$	0.63	$	0.60

PORTER BANCORP, INC. AND SUBSIDIARY Unaudited Financial Information (in thousands, except share and per share data)
	Three			Three			Three			Nine			Nine
	Months			Months			Months			Months			Months
	Ended			Ended			Ended			Ended			Ended
	9/30/09			6/30/09			9/30/08			9/30/09			9/30/08
Average Balance Sheet Data
Assets	$	1,674,703		$	1,734,866		$	1,582,701		$	1,701,967		$	1,553,301
Loans		1,368,970			1,360,191			1,351,897			1,363,150			1,316,367
Earning assets		1,599,943			1,659,389			1,498,361			1,626,887			1,469,511
Deposits		1,373,626			1,391,868			1,255,778			1,367,224			1,239,755
Long-term debt and advances		112,425			157,388			178,442			148,393			165,204
Interest bearing liabilities		1,401,791			1,456,778			1,353,983			1,426,975			1,325,525
Stockholders’ equity		168,561			167,168			128,080			167,172			126,112
Performance Ratios
Return on average assets		1.07	%		0.75	%		1.03	%		0.85	%		1.00	%
Return on average equity		10.68			7.79			12.73			8.67			12.36
Yield on average earning assets (tax equivalent)		5.93			5.74			6.70			5.86			6.92
Cost of interest bearing liabilities		2.67			2.98			3.72			2.98			4.04
Net interest margin (tax equivalent)		3.59			3.13			3.33			3.25			3.28
Efficiency ratio		47.14			55.94			47.47			52.18			50.78
Loan Charge-off Data
Loans charged-off	$	(829	)	$	(1,300	)	$	(782	)	$	(3,112	)	$	(1,999	)
Recoveries		47			69			37			218			225
Net charge-offs	$	(782	)	$	(1,231	)	$	(745	)	$	(2,894	)	$	(1,774	)

PORTER BANCORP, INC. AND SUBSIDIARY Unaudited Financial Information (in thousands, except share and per share data)
		As of		As of			As of			As of
		9/30/09		6/30/09			12/31/08			9/30/08
Assets
Loans	$	1,387,359		$	1,362,059		$	1,350,106		$	1,342,467
Loan loss reserve		(21,958	)		(20,740	)		(19,652	)		(18,638	)
Net loans		1,365,401			1,341,319			1,330,454			1,323,829
Securities available for sale		175,160			178,161			173,077			109,799
Federal funds sold & interest bearing deposits		74,232			79,284			38,189			30,172
Cash and due from financial institutions		17,610			17,844			14,957			41,943
Premises and equipment		23,756			23,412			22,543			22,986
Goodwill		23,794			23,794			23,794			23,891
Accrued interest receivable and other assets		48,809			45,994			44,843			43,572
Total Assets	$	1,728,762		$	1,709,808		$	1,647,857		$	1,596,192
Liabilities and Equity
Certificates of deposit	$	1,099,402		$	1,074,819		$	1,012,851		$	987,464
Interest checking		72,472			71,864			76,962			80,009
Money market		80,471			90,962			72,543			82,179
Savings		33,450			34,917			33,253			34,684
Total interest bearing deposits		1,285,795			1,272,562			1,195,609			1,184,336
Demand deposits		92,861			91,630			92,940			87,603
Total deposits		1,378,656			1,364,192			1,288,549			1,271,939
Federal funds purchased & repurchase agreements		11,296			11,232			10,084			10,457
FHLB advances		125,284			126,350			142,776			143,842
Junior subordinated debentures		34,000			34,000			34,000			34,000
Accrued interest payable and other liabilities		8,411			7,891			8,235			8,194
Total liabilities		1,557,647			1,543,665			1,483,644			1,468,432
Stockholders’ equity		171,115			166,143			164,213			127,760
Total Liabilities and Stockholders’ Equity	$	1,728,762		$	1,709,808		$	1,647,857		$	1,596,192
Ending common shares outstanding		8,339,102			8,339,617			8,287,933			8,287,794
Book value per common share	$	16.32		$	15.73		$	15.59		$	15.42
Tangible book value per common share		12.82			12.52			12.33			12.25
Asset Quality Data
Loan 90 days or more past due still on accrual	$	9,896		$	8,405		$	11,598		$	4,997
Non-accrual loans		16,369			10,872			9,725			10,420
Total non-performing loans		26,265			19,277			21,323			15,417
Real estate acquired through foreclosures		12,934			9,551			7,839			7,521
Other repossessed assets		77			80			96			96
Total non-performing assets	$	39,276		$	28,908		$	29,258		$	23,034
Non-performing loans to total loans		1.89	%		1.42	%		1.58	%		1.15	%
Non-performing assets to total assets		2.27			1.69			1.78			1.44
Allowance for loan losses to non-performing loans		83.60			107.59			92.16			120.89
Allowance for loan losses to total loans		1.58			1.52			1.46			1.39
Risk-based Capital Ratios
Tier I leverage ratio		10.13	%		9.62	%		10.10	%		8.11	%
Tier I risk-based capital ratio		11.90			11.98			12.13			9.55
Total risk-based capital ratio		13.80			13.89			14.05			11.49
FTE employees		281			278			276			283

CONTACT:
Porter Bancorp, Inc.
Maria L. Bouvette, 502-499-4800, Ext. 3601
President and CEO