Limestone Bancorp (LMST) 8-K Porter Bancorp, Inc. Announces Third Quarter 2012 Results

Exhibit 99.1

Porter Bancorp, Inc. Announces Third Quarter 2012 Results

PBIB Announces Third Quarter 2012 Results

LOUISVILLE, Ky.--(BUSINESS WIRE)--October 30, 2012--Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, with 18 full-service banking offices in Kentucky, today reported unaudited results for the third quarter of 2012.

The Company reported net loss to common shareholders of $26.9 million, or ($2.29) per diluted share, for the third quarter of 2012 compared with net loss to common shareholders of $12.2 million, or ($1.04) per diluted share, for the third quarter of 2011. Net loss to common shareholders for the nine months ended September 30, 2012, was $26.4 million, or ($2.25) per diluted common share, compared with net loss to common shareholders of $50.8 million, or ($4.34) per diluted share, for the nine months ended September 30, 2011. The loss for the nine months ended September 30, 2011 includes a non-recurring 100% goodwill impairment charge of $23.8 million recorded in the second quarter of 2011.

Financial performance continues to be negatively impacted by the Bank’s high level of nonperforming loans and other real estate owned. Non-performing loans increased to $90.1 million, or 9.47% of total loans, at September 30, 2012, compared with $81.7 million, or 7.85% of total loans, at June 30, 2012. Non-performing assets increased to $139.0 million, or 10.8% of total assets, compared with $136.1 million, or 10.2% of total assets, at June 30, 2012.

Foreclosed properties at September 30, 2012, decreased to $48.8 million compared with $54.4 million at June 30, 2012, and increased compared with $44.9 million at September 30, 2011. During the third quarter of 2012, the Company acquired $3.4 million of OREO, sold $4.7 million of OREO, and recorded OREO fair value write-downs totaling $4.3 million to reflect new appraisals or marketing prices during the third quarter of 2012.

Provision for loan losses totaled $25.5 million for the third quarter of 2012 compared to $4.0 million in the second quarter of 2012, and $8.0 million in the third quarter of 2011. Provision for loan losses totaled $33.3 million for the nine months ended September 30, 2012, compared to $26.8 million for the nine months ended September 30, 2011.

The increase in the provision for loan losses in the third quarter of 2012 is primarily attributable to collateral value declines for certain larger commercial real estate loans as evidenced by new appraisals received during the third quarter, higher net charge-offs, and a continued decline in credit trends in our loan portfolio. In addition, the third quarter 2012 provision for loan losses was negatively impacted by a strategy change during the quarter related to impaired loans whereby we expect to accelerate the remediation process through litigation or foreclosure. For impaired loans subject to such an expectation, we applied an additional fair value discount to the underlying collateral in our impairment analysis estimates for the third quarter of 2012, due to our experience that resolution of this nature generally results in receiving lower values for real estate collateral in a more aggressive sales environment.

Net loan charge-offs totaled $23.1 million for the third quarter of 2012 compared to $6.4 million in the second quarter of 2012, and $7.2 million in the third quarter of 2011. Net loan charge-offs totaled $31.8 for the nine months ended September 30, 2012, compared to $21.6 million for the nine months ended September 30, 2011.

Our net interest income also continued to decline in the three months and nine months ended September 30 2012, compared with the same periods in 2011, as average earning assets, primarily loans, declined $252.5 million and net interest margin declined 11 basis points between the nine months ended September 30, 2012, and the nine months ended September 30, 2011.

The Bank remains focused on executing its strategic plans to address the challenges related to a higher-than-normal level of non-performing loans and OREO, and the continuation of soft market conditions affecting the value and marketability of real estate. As part of the plan, John T. Taylor was hired in July as President and CEO of PBI Bank and President of Porter Bancorp, and John R. Davis joined the credit administration team in August and was subsequently approved by our primary regulators as Chief Credit Officer. Additionally, management remains diligently focused on assessing risk and determining the appropriate strategies to accelerate the reduction of the risk profile of the bank while formulating strategies and executing upon opportunities to increase revenue through improved net interest margin and non-interest income growth. We are also diligently focused on credit cost reduction and non-interest expense reductions as part of our plan to increase the long-term profitability of the bank.

At September 30, 2012, PBI Bank’s Tier 1 leverage ratio was 5.53% and its Total risk-based capital ratio was 9.85%, which are below the minimums of 9.0% and 12.0% required by the Bank’s Consent Order with its primary regulators. At September 30, 2012, Porter Bancorp’s Tier 1 leverage ratio was 5.00%, compared with 7.56% at June 30, 2012, and 6.53% at December 31, 2011, and its Total risk-based capital ratio was 10.01% compared with 11.94% at June 30, 2012, and 11.22% at December 31, 2011.

Management and the Board of Directors are evaluating appropriate strategies for increasing the company’s capital in order to meet the capital requirements of our Consent Order. A key component of that evaluation is reviewing the opportunity to sell common stock through either a public offering or private placement to new and existing shareholders. At Porter Bancorp’s 2012 annual shareholders’ meeting, shareholders approved an increase in our common shares authorized for issuance from 19 million shares to 86 million shares.

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. The words “believe,” “may,” “should,” “anticipate,” “estimate,” “expect,” “intend,” “objective,” “seek,” “plan,” “strive” or similar words, or negatives of these words, identify forward-looking statements. 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, 2012 follows.

PORTER BANCORP, INC. 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
	9/30/12			6/30/12			9/30/11			9/30/12			9/30/11
Income Statement Data
Interest income	$	13,987		$	14,812		$	18,103		$44,554			$	56,917
Interest expense		3,855			4,017			5,448		12,173				17,053
Net interest income		10,132			10,795			12,655		32,381				39,864
Provision for loan losses		25,500			4,000			8,000		33,250				26,800
Net interest income after provision		(15,368	)		6,795			4,655		(869		)		13,064
Service charges on deposit accounts		563			556			690		1,673				1,979
Income from fiduciary activities		261			291			237		803				738
Bank card interchange fees		180			196			168		553				500
Other real estate owned rental income		180			25			93		242				147
Gains on sales of loans originated for sale		138			77			123		260				664
Gains on sales of securities, net		—			1,511			—		3,530				1,108
Other		399			362			389		1,123				1,216
Non-interest income		1,721			3,018			1,700		8,184				6,352
Salaries & employee benefits		4,264			3,982			3,780		12,558				12,084
Occupancy and equipment		971			969			957		2,826				2,910
Goodwill impairment		—			—			—		—				23,794
Other real estate owned expense		5,204			1,205			17,029		7,666				40,505
FDIC insurance		559			832			930		2,264				2,640
Loan collection expense		792			586			802		1,738				1,989
Professional fees		776			567			329		1,699				963
Franchise tax		496			592			582		1,680				1,746
Communications expense		175			168			176		523				509
Postage and delivery		108			109			117		339				368
Advertising		44			28			93		105				282
Other		761			624			628		2,061				1,787
Non-interest expense		14,150			9,662			25,423		33,459				89,577
Income (loss) before income taxes		(27,797	)		151			(19,068	)	(26,144		)		(70,161	)
Income tax expense (benefit)		(65	)		—			(6,906	)	(65		)		(18,809	)
Net income (loss)		(27,732	)		151			(12,162	)	(26,079		)		(51,352	)
Less:
Dividends on preferred stock		437			438			437		1,312				1,312
Accretion on preferred stock		44			45			45		134				133
Earnings (loss) allocated to participating securities		(1,264	)		(13	)		(463	)	(1,095		)		(1,995	)
Net income (loss) available to common	$	(26,949	)	$	(319	)	$	(12,181	)	$(26,430		)	$	(50,802	)
Weighted average shares – Basic		11,751,818			11,733,156			11,721,591			11,732,835			11,713,040
Weighted average shares – Diluted		11,751,818			11,733,156			11,721,591			11,732,835			11,713,040
Basic earnings (loss) per common share	$	(2.29	)	$	(0.03	)	$	(1.04	)	$	(2.25	)	$	(4.34	)
Diluted earnings (loss) per common share	$	(2.29	)	$	(0.03	)	$	(1.04	)	$	(2.25	)	$	(4.34	)
Cash dividends declared per common share	$	0.00		$	0.00		$	0.00		$	0.00		$	0.02

PORTER BANCORP, INC. 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
	9/30/12			6/30/12			9/30/11			9/30/12			9/30/11
Average Balance Sheet Data
Assets	$	1,326,457		$	1,363,340		$	1,625,590		$	1,367,318		$	1,690,386
Loans		1,008,053			1,078,497			1,227,024			1,068,356			1,261,790
Earning assets		1,261,864			1,307,520			1,506,384			1,306,590			1,559,065
Deposits		1,196,580			1,231,281			1,405,543			1,235,573			1,453,121
Long-term debt and advances		38,328			38,959			50,463			38,944			50,034
Interest bearing liabilities		1,126,045			1,159,447			1,361,537			1,164,309			1,409,069
Stockholders’ equity		81,029			83,987			151,055			83,217			169,269
Performance Ratios
Return on average assets		(8.32	)%		0.04	%		(2.97	)%		(2.55	)%		(4.06	)%
Return on average equity		(136.16	)		0.72			(31.94	)		(41.86	)		(40.56	)
Yield on average earning assets (tax equivalent)		4.45			4.59			4.81			4.59			4.92
Cost of interest bearing liabilities		1.36			1.39			1.59			1.40			1.62
Net interest margin (tax equivalent)		3.23			3.35			3.38			3.35			3.46
Efficiency ratio		119.38			78.54			177.10			90.34			145.83
Loan Charge-off Data
Loans charged-off	$	(23,487	)	$	(6,438	)	$	(7,367	)	$	(32,507	)	$	(21,830	)
Recoveries		412			79			142			697			237
Net charge-offs	$	(23,075	)	$	(6,359	)	$	(7,225	)	$	(31,810	)	$	(21,593	)
Non-Accrual Loan Activity
Non-accrual loans at beginning of period	$	81,653		$	97,230		$	60,331		$	92,020		$	59,799
Loans returned to accrual status		—			—			(929	)		—			—
Net principal pay-downs		(5,768	)		(4,084	)		(3,059	)		(15,092	)		(9,920	)
Charge-offs		(13,442	)		(4,902	)		(4,804	)		(20,656	)		(15,538	)
Loans foreclosed and transferred to OREO		(3,339	)		(15,243	)		(3,613	)		(22,411	)		(17,043	)
Loan collateral repossessed		—			—			(10	)		—			—
Loans placed on non-accrual during the period		29,528			8,652			11,216			54,771			41,834
Non-accrual loans at end of period	$	88,632		$	81,653		$	59,132		$	88,632		$	59,132
Other Real Estate Owned (OREO) Activity (Net of Allowance)
OREO at beginning of period	$	54,365		$	35,574		$	49,913		$	41,449		$	67,635
Real estate acquired		3,405			23,910			15,971			31,531			31,232
Valuation adjustment write-downs		(4,260	)		(350	)		(15,265	)		(5,090	)		(30,702	)
Proceeds from sales of properties		(4,140	)		(4,223	)		(5,189	)		(17,573	)		(17,279	)
Gain (loss) on sales, net		(533	)		(546	)		(673	)		(1,481	)		(7,549	)
Capital improvements		—			—			176			1			1,596
OREO at end of period	$	48,837		$	54,365		$	44,933		$	48,837		$	44,933

PORTER BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
	As of			As of			As of			As of
	9/30/12			6/30/12			12/31/11			9/30/11
Assets
Loans	$	952,021		$	1,041,292		$	1,136,717		$	1,206,341
Loan loss reserve		(54,019	)		(51,594	)		(52,579	)		(39,492	)
											1
Net loans		898,002			989,698			1,084,138			1,166,849
Securities available for sale		198,148			194,091			158,833			158,813
Federal funds sold & interest bearing deposits		69,928			30,762			92,034			93,062
Cash and due from financial institutions		11,854			5,599			13,928			27,319
Premises and equipment		20,955			21,223			21,541			21,791
Other real estate owned		48,837			54,365			41,449			44,933
Deferred tax assets		—			—			—			24,005
Accrued interest receivable and other assets		38,317			39,114			43,501			41,251
Total Assets	$	1,286,041		$	1,334,852		$	1,455,424		$	1,578,023
Liabilities and Equity
Certificates of deposit	$	882,303		$	909,504		$	1,024,333		$	1,075,226
Interest checking		80,524			82,208			87,653			77,229
Money market		63,594			60,704			64,302			79,790
Savings		39,703			39,509			36,357			36,508
Total interest bearing deposits		1,066,124			1,091,925			1,212,645			1,268,753
Demand deposits		111,403			112,797			111,118			104,694
Total deposits		1,177,527			1,204,722			1,323,763			1,373,447
Federal funds purchased & repurchase agreements		2,403			2,501			1,738			11,328
FHLB advances		5,960			6,398			7,116			13,155
Junior subordinated debentures		32,200			32,200			32,650			32,875
Accrued interest payable and other liabilities		12,967			7,526			7,628			8,000
Total liabilities		1,231,057			1,253,347			1,372,895			1,438,805
Stockholders’ equity		54,984			81,505			82,529			139,218
Total Liabilities and Stockholders’ Equity	$	1,286,041		$	1,334,852		$	1,455,424		$	1,578,023
Ending shares outstanding		12,007,127			11,934,872			11,824,472			11,830,581
Book value per common share	$	1.39		$	3.62		$	3.74		$	8.53
Tangible book value per common share		1.22			3.44			3.54			8.32
Asset Quality Data
Loan 90 days or more past due still on accrual	$	1,486		$	88		$	1,350		$	655
Non-accrual loans		88,632			81,653			92,020			59,132
Total non-performing loans		90,118			81,741			93,370			59,787
Real estate acquired through foreclosures		48,837			54,365			41,449			44,933
Other repossessed assets		5			5			5			19
Total non-performing assets	$	138,960		$	136,111		$	134,824		$	104,739
Non-performing loans to total loans		9.47	%		7.85	%		8.22	%		4.96	%
Non-performing assets to total assets		10.81			10.20			9.26			6.64
Allowance for loan losses to non-performing loans		59.94			63.12			56.31			66.05
Allowance for loan losses to total loans		5.68			4.96			4.63			3.27
Risk-based Capital Ratios
Tier 1 leverage ratio		5.00	%		7.56	%		6.53	%		9.72	%
Tier 1 risk-based capital ratio		7.03			9.95			9.23			13.13
Total risk-based capital ratio		10.01			11.94			11.22			15.07
FTE employees		291			300			291			298

CONTACT:
Porter Bancorp, Inc.
Maria L. Bouvette, Chairman and CEO, 502-499-4800
or
John T. Taylor, President, 502-499-4800