Limestone Bancorp (LMST) 8-K Porter Bancorp Reports 3rd Quarter 2016 Net Income of $1.3 million or $0.04 per Diluted Share

Exhibit 99.1

Porter Bancorp Reports 3rd Quarter 2016 Net Income of $1.3 million or $0.04 per Diluted Share

Reports 28% NPA Reduction in 3rd Quarter

LOUISVILLE, Ky.--(BUSINESS WIRE)--October 26, 2016--Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, today reported unaudited results for the third quarter of 2016.

The Company reported that net income available to common shareholders for the third quarter of 2016 was $1.3 million, or $0.04 per basic and diluted common share, compared with net loss attributable to common shareholders of $1.0 million, or ($0.04) per basic and diluted share, for the third quarter of 2015. Net income available to common shareholders for the nine months ended September 30, 2016, was $3.8 million, or $0.13 per diluted common share, compared with net loss attributable to common shareholders of $2.3 million, or ($0.10) per diluted share, for the nine months ended September 30, 2015.

John T. Taylor, President and CEO of the Company noted, “More progress was made in the third quarter in reducing the overall levels of non-performing assets. Non-performing assets were reduced by $6.7 million from the previous quarter end and $16.1 million or 48% from the previous year end. We are also pleased to see a third consecutive profitable quarter supported by increasing net interest income versus the previous quarter.”

Net Interest Income – Net interest income increased to $7.5 million for the third quarter of 2016 compared to $7.2 million in the second quarter of 2016 and $7.5 million in the third quarter of 2015. Average loans increased to $626.1 million for the third quarter of 2016 compared with $619.3 million in the second quarter of 2016, and declined compared to $640.0 million in the third quarter of 2015. Net interest margin increased to 3.47% in the third quarter of 2016 compared to 3.34% in the second quarter of 2016 and 3.33% in the third quarter of 2015.

Our yield on earning assets increased to 4.15% in the third quarter of 2016 compared to 4.03% in the second quarter of 2016 and 4.07% in the third quarter of 2015. Our cost of funds was 0.78% in the third quarter of 2016 compared to 0.79% in the second quarter of 2016 and improved from 0.83% in the third quarter of 2015.

Allowance for Loan Losses and Recovery of Provision – The allowance for loan losses to total loans was 1.53% at September 30, 2016, compared to 1.62% at June 30, 2016, and 2.27% at September 30, 2015. The declining level of the allowance is primarily driven by declining charge-off levels and improving trends in credit quality. Net loan recoveries were $135,000 for the third quarter of 2016, compared to net charge-offs of $636,000 for the second quarter of 2016 and net charge-offs of $411,000 for the third quarter of 2015. The allowance for loan losses for loans evaluated collectively for impairment was 1.51% at September 30, 2016, compared with 1.66% at June 30, 2016, and 2.33% at September 30, 2015.

Because of ongoing improvements in asset quality and management’s assessment of risk in the loan portfolio, a negative provision of $750,000 was recorded for the third quarter of 2016, compared to a negative provision of $600,000 for the second quarter of 2016 and negative provision of $2.2 million in the third quarter of 2015.

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 to $17.2 million, or 1.88% of total assets at September 30, 2016, compared with $23.9 million, or 2.61% of total assets at June 30, 2016, and $46.2 million, or 4.85% of total assets at September 30, 2015.

Non-performing loans decreased to $10.1 million, or 1.62% of total loans, at September 30, 2016, compared with $11.6 million, or 1.86% of total loans at June 30, 2016, and $17.0 million, or 2.72% of total loans at September 30, 2015. The decrease from the previous quarter was primarily driven by $592,000 in principal payments received on nonaccrual loans, $667,000 of nonaccrual loans migrating to OREO, and $303,000 of charge-offs.

OREO at September 30, 2016, decreased to $7.1 million, compared with $12.3 million at June 30, 2016, and $29.2 million at September 30, 2015. The Company acquired $667,000 in OREO and sold $5.6 million in OREO during the third quarter of 2016. Fair value write-downs arising from lower marketing prices or new appraisals totaled $320,000 in the third quarter of 2016 compared with $150,000 in the second quarter of 2016 and $4.5 million in the third quarter of 2015.

The following table details past due loans and non-performing assets as of:
		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015
		(in thousands)
	Past due loans:
	30 – 59 days	$	2,335	$	2,401	$	1,829	$	3,133	$	1,972
	60 – 89 days		273		336		62		241		578
	90 days or more		—		—		—		—		—
	Nonaccrual loans		10,099		11,599		11,119		14,087		16,987
	Total past due and nonaccrual loans	$	12,707	$	14,336	$	13,010	$	17,461	$	19,537
	Loans past due 90 days or more	$	—	$	—	$	—	$	—	$	—
	Nonaccrual loans		10,099		11,599		11,119		14,087		16,987
	OREO		7,098		12,322		17,861		19,214		29,177
	Other repossessed assets		—		—		—		—		—
	Total non-performing assets	$	17,197	$	23,921	$	28,980	$	33,301	$	46,164

In addition to nonaccrual loans and OREO, loans classified as Troubled Debt Restructures (TDRs) and on accrual totaled $6.1 million at September 30, 2016, compared to $13.9 million at June 30, 2016, and $17.7 million at September 30, 2015.

Non-interest Income – Non-interest income decreased $47,000 to $1.1 million for the third quarter of 2016 compared with $1.2 million for the second quarter of 2016, and decreased $1.1 million compared with $2.2 million for the third quarter of 2015. The decrease in non-interest income from the third quarter of 2015 is due to the gain on extinguishment of junior subordinated debt of $883,000 recognized in 2015. Additionally, OREO income has continued to decline as income producing properties have been sold.

Non-interest Expense – Non-interest expense was unchanged at $7.9 million for the third quarter of 2016 compared to the second quarter of 2016, and decreased $5.0 million compared with $13.0 million for the third quarter of 2015. The decrease from the third quarter of 2015 was due to a decrease in OREO expense as a result of fewer write-downs during the third quarter of 2016.

Capital – On April 15, 2016, we completed a $5.03 million stock offering to accredited investors in a private placement transaction in which we issued 2,300,000 Common Shares and 1,100,000 Non-Voting Common Shares. Approximately $2.8 million of the proceeds were directed by the investors to make interest payments on the outstanding capital securities of the Company’s subsidiary trusts, which brought interest payments current through the second quarter of 2016. Also from the proceeds, the Company made a $500,000 capital contribution to PBI Bank and the balance of the proceeds will be used for general corporate purposes.

At September 30, 2016, PBI Bank’s Tier 1 leverage ratio was 6.97% compared with 6.65% at June 30, 2016, and its Total risk-based capital ratio was 11.18% at September 30, 2016, compared with 10.87% at June 30, 2016, which are below the minimums of 9.0% and 12.0% required by the Bank’s Consent Order. At September 30, 2016, Porter Bancorp’s leverage ratio was 6.21% compared with 5.87% at June 30, 2016, and its Total risk-based capital ratio was 11.57%, compared with 11.31% at June 30, 2016. At September 30, 2016, PBI Bank’s Common Equity Tier I risk-based capital ratio was 9.53% and Porter Bancorp’s Common Equity Tier I risk-based capital ratio was 6.37%.

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, 2016 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
	9/30/16			6/30/16			9/30/15			9/30/16			9/30/15
Income Statement Data
Interest income	$	8,931		$	8,705		$	9,179		$	26,821		$	27,549
Interest expense		1,473			1,509			1,697			4,516			5,438
Net interest income		7,458			7,196			7,482			22,305			22,111
Provision (negative provision) for loan losses		(750	)		(600	)		(2,200	)		(1,900	)		(2,200	)
Net interest income after provision		8,208			7,796			9,682			24,205			24,311
Service charges on deposit accounts		520			473			492			1,422			1,376
Bank card interchange fees		214			221			212			637			644
Other real estate owned income		46			149			380			451			1,109
Bank owned life insurance income		101			119			65			316			229
Gains (losses) on sales of securities, net		(16	)		—			—			187			1,696
Gain on extinguishment of debt		—			—			883			—			883
Other		240			190			178			635			534
Non-interest income		1,105			1,152			2,210			3,648			6,471
Salaries & employee benefits		3,945			3,857			3,920			11,624			11,795
Occupancy and equipment		842			808			815			2,504			2,513
Professional fees		374			492			620			1,251			2,313
FDIC insurance		442			493			539			1,458			1,673
Data processing expense		295			295			278			887			860
State franchise and deposit tax		255			255			285			765			855
Other real estate owned expense		322			294			5,131			1,284			8,796
Loan collection expense		222			271			321			575			895
Other		1,223			1,171			1,059			3,599			3,694
Non-interest expense		7,920			7,936			12,968			23,947			33,394
Income (loss) before income taxes		1,393			1,012			(1,076	)		3,906			(2,612	)
Income tax expense (benefit)		—			—			—			21			—
Net income (loss)		1,393			1,012			(1,076	)		3,885			(2,612	)
Less:
Earnings (loss) allocated to participating securities		46			33			(45	)		129			(338	)
Net income (loss) attributable to common	$	1,347		$	979		$	(1,031	)	$	3,756		$	(2,274	)
Weighted average shares – Basic		30,081,080			29,389,804			24,681,547			28,511,025			22,313,501
Weighted average shares – Diluted		30,081,080			29,389,804			24,681,547			28,511,025			22,313,501
Basic earnings (loss) per common share	$	0.04		$	0.03		$	(0.04	)	$	0.13		$	(0.10	)
Diluted earnings (loss) per common share	$	0.04		$	0.03		$	(0.04	)	$	0.13		$	(0.10	)
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
	9/30/16			6/30/16			9/30/15			9/30/16			9/30/15
Average Balance Sheet Data
Assets	$	917,625		$	936,000		$	968,471		$	930,288		$	994,355
Loans		626,095			619,253			639,954			621,824			641,489
Earning assets		864,307			876,721			903,857			874,185			923,318
Deposits		839,926			858,849			893,262			854,580			916,459
Long-term debt and advances		27,270			27,649			32,769			27,649			33,289
Interest bearing liabilities		748,585			766,712			813,753			764,852			838,207
Stockholders’ equity		42,170			39,214			30,920			38,324			32,876
Performance Ratios
Return on average assets		0.60	%		0.43	%		(0.44	)%		0.56	%		(0.35	)%
Return on average equity		13.14			10.38			(13.81	)		13.54			(10.62	)
Yield on average earning assets (tax equivalent)		4.15			4.03			4.07			4.14			4.03
Cost of interest bearing liabilities		0.78			0.79			0.83			0.79			0.87
Net interest margin (tax equivalent)		3.47			3.34			3.33			3.45			3.25
Efficiency ratio		92.32			95.06			133.80			92.94			124.21
Loan Charge-off Data
Loans charged-off	$	(405	)	$	(928	)	$	(1,580	)	$	(2,082	)	$	(5,171	)
Recoveries		540			292			1,169			1,430			2,205
Net charge-offs	$	135		$	(636	)	$	(411	)	$	(652	)	$	(2,966	)
Nonaccrual Loan Activity
Nonaccrual loans at beginning of period	$	11,599		$	11,119		$	30,215		$	14,087		$	47,175
Net principal pay-downs		(592	)		(731	)		(9,028	)		(4,035	)		(25,118	)
Charge-offs		(303	)		(344	)		(1,333	)		(1,291	)		(4,370	)
Loans foreclosed and transferred to OREO		(667	)		(135	)		(3,495	)		(1,243	)		(4,440	)
Loans returned to accrual status		(402	)		(265	)		(902	)		(751	)		(1,600	)
Loans placed on nonaccrual during the period		464			1,955			1,530			3,332			5,340
Nonaccrual loans at end of period	$	10,099		$	11,599		$	16,987		$	10,099		$	16,987
Troubled Debt Restructurings (TDRs)
Accruing	$	6,114		$	13,936		$	17,656		$	6,114		$	17,656
Nonaccrual		3,379			3,453			3,788			3,379			3,788
Total	$	9,493		$	17,389		$	21,444		$	9,493		$	21,444
Other Real Estate Owned (OREO) Activity
OREO at beginning of period	$	12,322		$	17,861		$	39,545		$	19,214		$	46,197
Real estate acquired		667			135			3,495			1,243			4,450
Valuation adjustment write-downs		(320	)		(150	)		(4,450	)		(970	)		(7,080	)
Proceeds from sales of properties		(5,623	)		(5,638	)		(9,397	)		(12,610	)		(14,417	)
Gain (loss) on sales, net		52			114			(16	)		221			27
OREO at end of period	$	7,098		$	12,322		$	29,177		$	7,098		$	29,177

PORTER BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
	As of
	9/30/16			6/30/16			3/31/16			12/31/15			9/30/15
Assets
Loans	$	621,697		$	624,136		$	619,827		$	618,666		$	624,414
Allowance for loan losses		(9,489	)		(10,104	)		(11,340	)		(12,041	)		(14,198	)
Net loans		612,208			614,032			608,487			606,625			610,216
Loans held for sale		134			—			113			186			71
Securities held to maturity		41,883			41,948			42,011			42,075			42,138
Securities available for sale		142,433			143,145			141,525			144,978			146,837
Federal funds sold & interest bearing deposits		57,578			49,313			72,209			85,329			73,940
Cash and due from financial institutions		6,266			8,289			8,097			8,006			6,540
Premises and equipment		18,481			18,618			18,751			18,812			19,109
Bank owned life insurance		14,741			14,646			14,531			9,441			9,381
FHLB Stock		7,323			7,323			7,323			7,323			7,323
Other real estate owned		7,098			12,322			17,861			19,214			29,177
Accrued interest receivable and other assets		7,135			6,916			7,251			6,733			6,748
Total Assets	$	915,280		$	916,552		$	938,159		$	948,722		$	951,480
Liabilities and Equity
Certificates of deposit	$	454,742		$	461,183		$	478,965		$	499,827		$	534,031
Interest checking		88,386			90,806			96,465			97,515			83,247
Money market		140,995			135,643			134,684			125,935			119,324
Savings		33,816			34,616			35,197			34,677			35,131
Total interest bearing deposits		717,939			722,248			745,311			757,954			771,733
Demand deposits		119,005			117,843			120,302			120,043			106,160
Total deposits		836,944			840,091			865,613			877,997			877,893
FHLB advances		2,619			2,775			2,932			3,081			3,255
Junior subordinated debentures		24,375			24,600			24,825			25,050			25,275
Accrued interest payable and other liabilities		7,721			7,651			10,181			10,577			11,249
Total liabilities		871,659			875,117			903,551			916,705			917,672
Preferred stockholders’ equity		2,771			2,771			2,771			2,771			2,771
Common stockholders’ equity		40,850			38,664			31,837			29,246			31,037
Total stockholders’ equity		43,621			41,435			34,608			32,017			33,808
Total Liabilities and Stockholders’ Equity	$	915,280		$	916,552		$	938,159		$	948,722		$	951,480
Ending shares outstanding		31,114,969			31,118,302			26,944,177			26,947,533			26,949,205
Book value per common share	$	1.31		$	1.24		$	1.18		$	1.09		$	1.15
Tangible book value per common share		1.31			1.23			1.17			1.07			1.13

PORTER BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
	As of
	9/30/16			6/30/16			3/31/16			12/31/15			9/30/15
Asset Quality Data
Loan 90 days or more past due still on accrual	$	—		$	—		$	—		$	—		$	—
Nonaccrual loans		10,099			11,599			11,119			14,087			16,987
Total non-performing loans		10,099			11,599			11,119			14,087			16,987
Real estate acquired through foreclosures		7,098			12,322			17,861			19,214			29,177
Other repossessed assets		—			—			—			—			—
Total non-performing assets	$	17,197		$	23,921		$	28,980		$	33,301		$	46,164
Non-performing loans to total loans		1.62	%		1.86	%		1.79	%		2.28	%		2.72	%
Non-performing assets to total assets		1.88			2.61			3.09			3.51			4.85
Allowance for loan losses to non-performing loans		93.96			87.11			101.99			85.48			83.58
Allowance for loans evaluated individually	$	339		$	146		$	464		$	428		$	469
Loans evaluated individually for impairment		16,214			25,535			26,236			31,776			34,895
Allowance as % of loans evaluated individually		2.09	%		0.57	%		1.77	%		1.35	%		1.34	%
Allowance for loans evaluated collectively	$	9,150		$	9,958		$	10,876		$	11,613		$	13,729
Loans evaluated collectively for impairment		605,483			598,601			593,591			586,890			589,519
Allowance as % of loans evaluated collectively		1.51	%		1.66	%		1.83	%		1.98	%		2.33	%
Allowance for loan losses to total loans		1.53	%		1.62	%		1.83	%		1.95	%		2.27	%
Loans by Risk Category
Pass	$	551,075		$	547,853		$	534,451		$	517,484		$	508,470
Watch		46,049			50,024			59,265			63,363			66,726
Special Mention		603			622			1,383			1,395			1,700
Substandard		23,970			25,637			24,728			36,424			47,518
Doubtful		—			—			—			—			—
Total	$	621,697		$	624,136		$	619,827		$	618,666		$	624,414
Risk-based Capital Ratios - Company
Tier I leverage ratio		6.21	%		5.87	%		5.03	%		4.74	%		4.73	%
Common equity Tier I risk-based capital ratio		6.37			6.11			5.21			5.09			5.07
Tier I risk-based capital ratio		8.48			8.16			7.03			6.89			6.86
Total risk-based capital ratio		11.57			11.31			10.46			10.46			10.40
Risk-based Capital Ratios – PBI Bank
Tier I leverage ratio		6.97	%		6.65	%		6.39	%		6.08	%		6.01	%
Common equity Tier I risk-based capital ratio		9.53			9.22			8.94			8.84			8.73
Tier I risk-based capital ratio		9.53			9.22			8.94			8.84			8.73
Total risk-based capital ratio		11.18			10.87			10.64			10.58			10.50
FTE employees		233			239			246			244			246

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