Limestone Bancorp (LMST) 8-K Non-Performing Assets Reduced by $23.7 Million or 33.9% in Third Quarter

Exhibit 99.1

Porter Bancorp Reports Third Quarter 2015 Net Loss of $1.0 Million or ($0.04) Per Diluted Share; Book Value Per Share Increased from $1.06 to $1.15 on Debt Extinguishment

Non-Performing Assets Reduced by $23.7 Million or 33.9% in Third Quarter

LOUISVILLE, Ky.--(BUSINESS WIRE)--October 30, 2015--Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, today reported unaudited results for the third quarter of 2015.

The Company reported net loss attributable to common shareholders for the third quarter of 2015 of $1.0 million, or ($0.04) per basic and diluted common share, compared with net loss attributable to common shareholders of $1.5 million, or ($0.12) per basic and diluted share, for the third quarter of 2014. Net loss attributable to common shareholders for the nine months ended September 30, 2015, was $2.3 million, or ($0.10) per diluted common share, compared with net loss attributable to common shareholders of $8.8 million, or ($0.73) per diluted share, for the nine months ended September 30, 2014.

“We are pleased to report that during the third quarter we were able to buy back and retire $4.0 million of junior subordinated debt and $330,000 of accrued unpaid interest at a $2.6 million discount by issuing a total of 1.2 million common shares,” said John T. Taylor, Chief Executive Officer of the Company. In the transaction, $2.67 million of the debt was exchanged for equity with related parties and transferred directly to common equity and $1.33 million of the debt was exchanged for equity with an unrelated third party resulting in a gain on extinguishment of the debt totaling $883,000.

“Additionally, we have continued to make significant progress in reducing our non-performing assets. In this quarter alone, we reduced non-performing assets by $23.7 million or 33.9% from $69.9 million at June 30, 2015 to $46.2 million at September 30, 2015,” said Taylor.

Net Interest Income – Net interest income before provision increased to $7.48 million for the third quarter of 2015 compared to $7.34 million in the second quarter of 2015 and $7.34 million in the third quarter of 2014. While average loans decreased slightly to $640.0 million for the third quarter of 2015 compared with $641.6 million in the second quarter of 2015, and were consistent with the third quarter of 2014, net interest margin increased to 3.33% in the third quarter of 2015 compared to 3.21% in the second quarter of 2015 and 3.10% in the third quarter of 2014. The increase in net interest margin was primarily driven by the continued reduction in cost of funds, which declined to 0.83% in the third quarter of 2015 compared with 0.87% in the second quarter of 2015 and 1.13% in the third quarter of 2014.

Allowance for Loan Losses and Recovery of Provision – The allowance for loan losses to total loans was 2.27% at September 30, 2015, compared to 2.59% at June 30, 2015, and 3.79% at September 30, 2014. The allowance for loan losses for loans evaluated collectively for impairment was 2.33% at September 30, 2015, compared with 2.66% at June 30, 2015 and 4.00% at September 30, 2014.

The reduced level of the allowance and the $2.2 million recovery of provision in the third quarter were primarily driven by declining historical loss rates, improving trends in loan category risk ratings, and management’s assessment of lower risk in the portfolio. Substandard loans decreased by $21.5 million or 31.2% over the past quarter and $44.0 million or 48.1% over the first nine months of 2015, net charge-offs were $3.0 million for the first nine months of 2015 compared to $10.2 million for the first nine months of 2014, and non-accrual loans decreased by $13.2 million or 43.8% over the past quarter and $30.2 million or 64.0% over the first nine months of 2015.

Net loan charge-offs decreased to $411,000 for the third quarter of 2015 compared to $1.8 million for the second quarter of 2015 and $935,000 for the third quarter of 2014.

Non-performing Assets – Non-performing assets, which include loans past due 90 days and still accruing, loans on nonaccrual, and other real estate owned (“OREO”), decreased considerably to $46.2 million, or 4.85% of total assets at September 30, 2015, compared with $69.9 million, or 7.13% of total assets at June 30, 2015, and $99.2 million, or 9.62% of total assets at September 30, 2014.

Non-performing loans decreased to $17.0 million, or 2.72% of total loans, at September 30, 2015, compared with $30.3 million, or 4.67% of total loans at June 30, 2015, and $44.7 million, or 7.00% of total loans at September 30, 2014. The decrease from the previous quarter was primarily driven by $9.0 million in principal payments received on nonaccrual loans, $3.5 million of nonaccrual loans migrating to OREO, and $1.3 million of charge-offs.

OREO at September 30, 2015 decreased to $29.2 million, compared with $39.5 million at June 30, 2015 and $54.5 million at September 30, 2014. The Company acquired $3.5 million in OREO and sold $9.4 million in OREO during the third quarter of 2015. Fair value write-downs arising from reductions in listing prices for certain properties, updated appraisals, and certain properties liquidated through auctions near and after the end of the third quarter totaled $4.5 million in the third quarter of 2015 compared with $2.3 million in the second quarter of 2015 and $600,000 in the third quarter of 2014. Progress continues in the disposition of OREO. At quarter end, $6.5 million of OREO property was subject to a contract for sale or letter of intent.

The following table details past due loans and non-performing assets as of:
	September 30, 2015		June 30, 2015		March 31, 2015		December 31, 2014		September 30, 2014
	(in thousands)
Past due loans:
30 – 59 days	$	1,972	$	1,941	$	4,370	$	3,960	$	3,507
60 – 89 days		578		650		1,769		980		3,333
90 days or more		—		92		18		151		—
Nonaccrual loans		16,987		30,215		36,500		47,175		44,670
Total past due and nonaccrual loans	$	19,537	$	32,898	$	42,657	$	52,266	$	51,510
Loans past due 90 days or more	$	—	$	92	$	18	$	151	$	—
Nonaccrual loans		16,987		30,215		36,500		47,175		44,670
OREO		29,177		39,545		43,618		46,197		54,507
Other repossessed assets		—		—		—		—		—
Total non-performing assets	$	46,164	$	69,852	$	80,136	$	93,523	$	99,177

In addition to nonaccrual loans and OREO, loans classified as Troubled Debt Restructures (TDRs) and on accrual totaled $17.7 million at September 30, 2015, compared to $18.5 million at June 30, 2015, and $28.1 million at September 30, 2014.

Non-interest Income – Non-interest income increased $645,000 to $2.2 million for the third quarter of 2015 compared with $1.6 million for the second quarter of 2015, and increased $1.2 million compared with $1.1 million for the third quarter of 2014. The increase in non-interest income was driven primarily by a gain of $883,000 recognized in relation to the extinguishment of our junior subordinated debt, offset by a reduction in gains on the sales of securities which totaled $199,000 in the second quarter of 2015, with no sales in the third quarter. The increase from the third quarter of 2014 was primarily due to an increase in OREO rental income of $375,000, as well as the gain on debt extinguishment noted above.

Non-interest Expense – Non-interest expense increased $1.9 million to $13.0 million for the third quarter of 2015 compared with $11.0 million for the second quarter of 2015, and increased $3.7 million compared with $9.3 million for the third quarter of 2014. The increase from the second quarter of 2015 was primarily due to an increase in OREO expenses of approximately $2.2 million, partially offset by decreases in professional fees and other non-interest expenses. OREO expenses increased quarter over quarter primarily due to an increase in fair value write-downs of $2.0 million resulting from declines in the fair value of the real estate based upon reductions in listing prices for certain properties, updated appraisals, and certain properties liquidated through auctions near and after the end of the third quarter 2015. The increase from the third quarter of 2014 was also due to an increase in OREO expenses from $560,000 to $5.1 million, primarily due to declines in fair value as noted above. For the third quarter 2015, the second quarter 2015, and the third quarter 2014, non-interest expense before OREO expenses totaled $7.8 million, $8.1 million, and $8.7 million, respectively and $13.0 million, $11.0 million, and $9.3 million after OREO expenses, respectively.

Capital – At September 30, 2015, PBI Bank’s Tier 1 leverage ratio improved slightly to 6.01% compared with 5.95% at June 30, 2015, and its Total risk-based capital ratio was 10.50% at September 30, 2015 compared with 10.34% at June 30, 2015. Both are below the minimums of 9.0% and 12.0% required by the Bank’s Consent Order. At September 30, 2015, Porter Bancorp’s leverage ratio was 4.73% compared with 4.25% at June 30, 2015, and its Total risk-based capital ratio was 10.40%, compared with 10.25% at June 30, 2015. At September 30, 2015, PBI Bank’s Common equity Tier I risk-based capital ratio was 8.73% compared with 8.43% at June 30, 2015. Porter Bancorp’s Common equity Tier I risk-based capital ratio was 5.07% compared with 4.42% at June 30, 2015.

Management and the Board of Directors remain committed to evaluating and implementing appropriate strategies for increasing the Company’s capital in order to meet the requirements of the Consent Order.

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,” “possible,” “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 indicated by forward-looking statements due to various risks and uncertainties, including our ability to reduce our level of higher risk loans such as commercial real estate and real estate development loans, reduce our level of non-performing loans and other real estate owned, and increase net interest income in a low interest rate environment, as well as our need to increase capital. These and other risks and uncertainties are described in greater detail 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 quarter ending September 30, 2015 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
	9/30/15			6/30/15			9/30/14			9/30/15			9/30/14
Income Statement Data
Interest income	$	9,179		$	9,167		$	9,814		$	27,549		$	29,877
Interest expense		1,697			1,828			2,477			5,438			7,626
Net interest income		7,482			7,339			7,337			22,111			22,251
Provision for loan losses		(2,200	)		—			—			(2,200	)		6,300
Net interest income after provision		9,682			7,339			7,337			24,311			15,951
Service charges on deposit accounts		492			475			535			1,376			1,490
Bank card interchange fees		212			229			209			644			575
Other real estate owned income		380			372			5			1,109			30
Gains (losses) on sales of securities, net		—			199			46			1,696			92
Gain on extinguishment of debt		883			—			—			883			—
Other		243			290			262			763			734
Non-interest income		2,210			1,565			1,057			6,471			2,921
Salaries & employee benefits		3,920			4,028			4,041			11,795			11,731
Occupancy and equipment		815			828			857			2,513			2,645
Professional fees		620			714			361			2,313			1,134
FDIC insurance		539			564			571			1,673			1,682
Data processing expense		278			278			269			860			818
State franchise and deposit tax		285			285			405			855			1,235
Other real estate owned expense		5,131			2,932			560			8,796			1,996
Loan collection expense		321			291			858			895			2,646
Other		1,059			1,114			1,359			3,694			3,700
Non-interest expense		12,968			11,034			9,281			33,394			27,587
Income (loss) before income taxes		(1,076	)		(2,130	)		(887	)		(2,612	)		(8,715	)
Income tax expense (benefit)		���			—			(38	)		—			(1,345	)
Net income (loss)		(1,076	)		(2,130	)		(849	)		(2,612	)		(7,370	)
Less:
Dividends on preferred stock		—			—			786			—			2,361
Earnings (loss) allocated to participating securities		(45	)		(91	)		(162	)		(338	)		(928	)
Net income (loss) attributable to common	$	(1,031	)	$	(2,039	)	$	(1,473	)	$	(2,274	)	$	(8,803	)
Weighted average shares – Basic		24,681,547			24,589,507			12,086,843			22,313,501			12,044,858
Weighted average shares – Diluted		24,681,547			24,589,507			12,086,843			22,313,501			12,044,858
Basic earnings (loss) per common share	$	(0.04	)	$	(0.08	)	$	(0.12	)	$	(0.10	)	$	(0.73	)
Diluted earnings (loss) per common share	$	(0.04	)	$	(0.08	)	$	(0.12	)	$	(0.10	)	$	(0.73	)
Cash dividends declared per common share	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00

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
	9/30/15			6/30/15			9/30/14			9/30/15			9/30/14
Average Balance Sheet Data
Assets	$	968,471		$	1,003,507		$	1,033,818		$	994,355		$	1,054,592
Loans		639,954			641,587			640,011			641,489			671,733
Earning assets		903,857			930,415			954,217			923,318			988,031
Deposits		893,262			924,840			947,989			916,459			965,975
Long-term debt and advances		32,769			33,208			35,202			33,289			35,269
Interest bearing liabilities		813,753			846,892			873,520			838,207			892,738
Stockholders’ equity		30,920			33,770			31,101			32,876			35,213
Performance Ratios
Return on average assets		(0.44	)%		(0.85	)%		(0.33	)%		(0.35	)%		(0.93	)%
Return on average equity		(13.81	)		(25.30	)		(10.83	)		(10.62	)		(27.98	)
Yield on average earning assets (tax equivalent)		4.07			4.00			4.13			4.03			4.09
Cost of interest bearing liabilities		0.83			0.87			1.13			0.87			1.14
Net interest margin (tax equivalent)		3.33			3.21			3.10			3.25			3.06
Efficiency ratio		133.80			126.75			111.18			124.21			110.00
Loan Charge-off Data
Loans charged-off	$	(1,580	)	$	(2,264	)	$	(1,824	)	$	(5,171	)	$	(13,229	)
Recoveries		1,169			476			889			2,205			3,003
Net charge-offs	$	(411	)	$	(1,788	)	$	(935	)	$	(2,966	)	$	(10,226	)
Nonaccrual Loan Activity
Nonaccrual loans at beginning of period	$	30,215		$	36,500		$	44,375		$	47,175		$	101,767
Net principal pay-downs		(9,028	)		(5,336	)		(3,229	)		(25,118	)		(25,669	)
Charge-offs		(1,333	)		(2,082	)		(1,217	)		(4,370	)		(11,814	)
Loans foreclosed and transferred to OREO		(3,495	)		(608	)		(797	)		(4,440	)		(31,023	)
Loans returned to accrual status		(902	)		(620	)		(57	)		(1,600	)		(3,289	)
Loans placed on nonaccrual during the period		1,530			2,361			5,595			5,340			14,698
Nonaccrual loans at end of period	$	16,987		$	30,215		$	44,670		$	16,987		$	44,670
Troubled Debt Restructurings (TDRs)
Accruing	$	17,656		$	18,548		$	28,114		$	17,656		$	28,114
Nonaccrual		3,788			15,006			21,415			3,788			21,415
Total	$	21,444		$	33,554		$	49,529		$	21,444		$	49,529
Other Real Estate Owned (OREO) Activity (Net of Allowance)
OREO at beginning of period	$	39,545		$	43,618		$	56,882		$	46,197		$	30,892
Real estate acquired		3,495			608			797			4,450			31,663
Valuation adjustment write-downs		(4,450	)		(2,330	)		(600	)		(7,080	)		(1,250	)
Proceeds from sales of properties		(9,397	)		(2,391	)		(2,973	)		(14,417	)		(7,253	)
Gain (loss) on sales, net		(16	)		40			401			27			455
OREO at end of period	$	29,177		$	39,545		$	54,507		$	29,177		$	54,507

PORTER BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
	As of
	9/30/15			6/30/15			3/31/15			12/31/14			9/30/14			6/30/14
Assets
Loans	$	624,414		$	648,321		$	632,428		$	624,999		$	638,360		$	643,030
Allowance for loan losses		(14,198	)		(16,809	)		(18,597	)		(19,364	)		(24,198	)		(25,133	)
Net loans		610,216			631,512			613,831			605,635			614,162			617,897
Loans held for sale		71			125			—			8,926			—			280
Securities held to maturity		42,138			42,202			42,263			42,325			42,386			43,488
Securities available for sale		146,837			151,758			157,290			190,791			192,146			180,723
Federal funds sold & interest bearing deposits		73,940			63,987			101,872			66,011			73,494			95,353
Cash and due from financial institutions		6,540			7,403			7,899			14,169			11,336			6,913
Premises and equipment		19,109			19,167			19,323			19,507			19,649			19,788
Bank owned life insurance		9,381			9,320			9,231			9,167			9,103			9,039
FHLB Stock		7,323			7,323			7,323			7,323			7,323			7,323
Other real estate owned		29,177			39,545			43,618			46,197			54,507			56,882
Accrued interest receivable and other assets		6,748			6,998			7,056			7,938			6,608			7,181
Total Assets	$	951,480		$	979,340		$	1,009,706		$	1,017,989		$	1,030,714		$	1,044,867
Liabilities and Equity
Certificates of deposit	$	534,031		$	564,253		$	597,117		$	574,681		$	609,682		$	631,110
Interest checking		83,247			84,627			86,614			91,086			76,431			76,625
Money market		119,324			110,529			102,349			109,734			100,890			95,946
Savings		35,131			35,942			36,418			36,430			36,364			37,178
Total interest bearing deposits		771,733			795,351			822,498			811,931			823,367			840,859
Demand deposits		106,160			108,800			108,011			114,910			110,165			109,956
Total deposits		877,893			904,151			930,509			926,841			933,532			950,815
Federal funds purchased & repurchase agreements		—			1,265			1,145			1,341			1,817			2,451
FHLB advances		3,255			3,430			3,597			15,752			16,940			14,134
Junior subordinated debentures		25,275			29,500			29,725			29,950			30,175			30,400
Accrued interest payable and other liabilities		11,249			10,949			10,758			10,640			18,922			16,453
Total liabilities		917,672			949,295			975,734			984,524			1,001,386			1,014,253
Preferred stockholders’ equity		2,771			2,771			2,771			8,552			38,283			38,283
Common stockholders’ equity (deficit)		31,037			27,274			31,201			24,913			(8,955	)		(7,669	)
Total stockholders’ equity		33,808			30,045			33,972			33,465			29,328			30,614
Total Liabilities and Stockholders’ Equity	$	951,480		$	979,340		$	1,009,706		$	1,017,989		$	1,030,714		$	1,044,867
Ending shares outstanding		26,949,205			25,759,223			25,663,495			14,890,514			13,099,400			13,104,853
Book value per common share	$	1.15		$	1.06		$	1.22		$	1.67		$	(0.68	)	$	(0.59	)
Tangible book value per common share		1.13			1.03			1.18			1.61			(0.76	)		(0.67	)

PORTER BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
	As of
	9/30/15			6/30/15			3/31/15			12/31/14			9/30/14			6/30/14
Asset Quality Data
Loan 90 days or more past due still on accrual	$	—		$	92		$	18		$	151		$	—		$	—
Nonaccrual loans		16,987			30,215			36,500			47,175			44,670			44,375
Total non-performing loans		16,987			30,307			36,518			47,326			44,670			44,375
Real estate acquired through foreclosures		29,177			39,545			43,618			46,197			54,507			56,882
Other repossessed assets		—			—			—			—			—			—
Total non-performing assets	$	46,164		$	69,852		$	80,136		$	93,523		$	99,177		$	101,257
Non-performing loans to total loans		2.72	%		4.67	%		5.77	%		7.57	%		7.00	%		6.90	%
Non-performing assets to total assets		4.85			7.13			7.94			9.19			9.62			9.69
Allowance for loan losses to non-performing loans		83.58			55.46			50.93			40.92			54.17			56.64
Allowance for loans evaluated individually	$	469		$	842		$	254		$	752		$	1,788		$	1,753
Loans evaluated individually for impairment		34,895			49,011			55,299			71,993			78,695			79,742
Allowance as % of loans evaluated individually		1.34	%		1.72	%		0.46	%		1.04	%		2.27	%		2.20	%
Allowance for loans evaluated collectively	$	13,729		$	15,967		$	18,343		$	18,612		$	22,410		$	23,380
Loans evaluated collectively for impairment		589,519			599,310			577,129			553,006			559,665			563,288
Allowance as % of loans evaluated collectively		2.33	%		2.66	%		3.18	%		3.37	%		4.00	%		4.15	%
Allowance for loan losses to total loans		2.27	%		2.59	%		2.94	%		3.10	%		3.79	%		3.91	%
Loans by Risk Category
Pass	$	508,470		$	509,843		$	480,545		$	461,126		$	446,166		$	434,853
Watch		66,726			67,712			76,876			68,200			83,711			91,208
Special Mention		1,700			1,718			1,110			4,189			4,431			3,223
Substandard		47,518			69,048			73,897			91,484			104,052			113,746
Doubtful		—			—			—			—			—			—
Total	$	624,414		$	648,321		$	632,428		$	624,999		$	638,360		$	643,030
Risk-based Capital Ratios - Company
Tier I leverage ratio		4.73	%		4.25	%		4.13	%		4.51	%		4.02	%		4.10	%
Common equity Tier I risk-based capital ratio		5.07			4.42			4.68			N/A			N/A			N/A
Tier I risk-based capital ratio		6.86			6.02			5.85			6.70			5.93			6.19
Total risk-based capital ratio		10.40			10.25			10.00			10.61			10.05			10.27
Risk-based Capital Ratios – PBI Bank
Tier I leverage ratio		6.01	%		5.95	%		5.84	%		5.78	%		6.09	%		5.96	%
Common equity Tier I risk-based capital ratio		8.73			8.43			8.32			N/A			N/A			N/A
Tier I risk-based capital ratio		8.73			8.43			8.32			8.59			8.99			9.00
Total risk-based capital ratio		10.50			10.34			10.26			10.57			11.01			11.06
FTE employees		246			253			258			264			268			275

CONTACT:
Porter Bancorp, Inc.
John T. Taylor, 502-499-4800
Chief Executive Officer