Limestone Bancorp (LMST) 8-K Porter Bancorp Reported 2016 Net Loss Narrowed to $2.7 Million or ($0.46) per Share Compared to 2015 Net Loss of $2.9 Million or ($0.62) per Share

Exhibit 99.1

Porter Bancorp Reported 2016 Net Loss Narrowed to $2.7 Million or ($0.46) per Share Compared to 2015 Net Loss of $2.9 Million or ($0.62) per Share

Appeals court ruling negatively impacted 2016 annual results by $1.38 per basic and diluted common share

LOUISVILLE, Ky.--(BUSINESS WIRE)--January 25, 2017--Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, today reported unaudited results for the fourth quarter of 2016. Per share amounts in this release have been adjusted to reflect the 1-for-5 reverse stock split of the Company’s common shares that was effective on December 16, 2016.

The Company reported a net loss attributable to common shareholders for the fourth quarter of 2016 of $6.4 million, or ($1.07) per basic and diluted common share, compared to a net loss attributable to common shareholders of $579,000, or ($0.11) per basic and diluted share, for the fourth quarter of 2015 and a net loss attributable to common shareholders for the year ended December 31, 2016, of $2.7 million, or ($0.46) per basic and diluted common share, compared to net loss attributable to common shareholders of $2.9 million, or ($0.62) per basic and diluted common share, for the year ended December 31, 2015.

As the Company reported on December 2, 2016, the fourth quarter of 2016 was negatively impacted by the Kentucky Court of Appeals ruling against the Bank in a decision with a partial dissent that upheld the award of $1.515 million in compensatory damages and $5.5 million in punitive damages by the trial court. The Bank previously accrued the compensatory damages along with interest at the statutory rate. The punitive damages and statutory interest of approximately $8.0 million had not been previously accrued and impacted fourth quarter 2016 earnings. On December 30, 2016, the Bank filed a motion for discretionary review with the Kentucky Supreme Court. Funds to retire all amounts due are on hand and available to meet this obligation with no material impact to liquidity should a decision be made to retire the accrued liability.

John T. Taylor, President and CEO noted, “While we were very disappointed with the court’s decision regarding this legacy issue, the Bank’s capital and liquidity remain strong and its mission to serve our customers remains unchanged. After adjusting for the additional $8.0 million cost of the December 2016 ruling, net income available to common shareholders would have been approximately $5.3 million, or $0.92 per basic and diluted common share in 2016. It is also important to note that the Company’s core financial performance improved significantly in 2016 as the balance sheet stabilized after a meaningful reduction in size over the past several years, asset quality improved significantly with non-performing assets and accruing TDRs declining from 5.3% to 2.3% of total assets, and net interest margin improved from 3.27% in 2015 to 3.42% in 2016. We are excited about our prospects for 2017 as we work to grow the franchise.”

Net Interest Income – Net interest income before provision was $7.3 million for the fourth quarter of 2016 compared to $7.5 million in the third quarter of 2016 and $7.4 million in the fourth quarter of 2015. Average loans decreased to $619.6 million for the fourth quarter of 2016 compared with $626.1 million in the third quarter of 2016, and $619.5 million for the fourth quarter of 2015. Net interest margin decreased to 3.35% in the fourth quarter of 2016 compared to 3.47% in the third quarter of 2016 and 3.32% in the fourth quarter of 2015.

Our yield on earning assets decreased to 4.01% in the fourth quarter of 2016, compared to 4.15% for the third quarter of 2016 and 4.02% in the fourth quarter of 2015. Our cost of funds was 0.78% in both the third and fourth quarters of 2016, compared to 0.79% for the fourth quarter of 2015.

Allowance for Loan Losses and Negative Provision for Loan Losses – The allowance for loan losses to total loans was 1.40% at December 31, 2016, compared to 1.53% at September 30, 2016, and 1.95% at December 31, 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 $28,000 for the fourth quarter of 2016, compared to net loan recoveries of $135,000 for the third quarter of 2016 and net loan recoveries of $143,000 for the fourth quarter of 2015. The allowance for loan losses for loans evaluated collectively for impairment was 1.37% at December 31, 2016, compared with 1.51% at September 30, 2016, and 1.98% at December 31, 2015.

Because of ongoing improvements in asset quality and management’s assessment of risk in the loan portfolio, a negative provision of $550,000 was recorded for the fourth quarter of 2016, compared to a negative provision of $750,000 for the third quarter of 2016 and negative provision of $2.3 million in the fourth 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 $16.0 million, or 1.70% of total assets at December 31, 2016, compared with $17.2 million, or 1.88% of total assets at September 30, 2016, and $33.3 million, or 3.51% of total assets, at December 31, 2015.

Non-performing loans decreased to $9.2 million, or 1.44% of total loans at December 31, 2016, compared with $10.1 million, or 1.62% of total loans at September 30, 2016, and $14.1 million, or 2.28% of total loans, at December 31, 2015. The decrease from the previous year was primarily driven by $5.3 million in principal payments received on nonaccrual loans, $1.3 million of nonaccrual loans migrating to OREO, and $1.7 million of charge-offs offset by $4.4 million in loans placed on nonaccrual during 2016.

OREO at December 31, 2016, decreased to $6.8 million, compared with $7.1 million at September 30, 2016, and $19.2 million at December 31, 2015. The Company acquired $30,000 in OREO and sold $98,000 in OREO during the fourth quarter of 2016. Fair value write-downs arising from lower market prices or new appraisals totaled $210,000 in the fourth quarter of 2016 compared with $320,000 in the third quarter of 2016 and $2.8 million in the fourth quarter of 2015.

The following table details past due loans and non-performing assets as of:

	December 31, 2016		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015
		(in thousands)
Past due loans:
30 – 59 days	$	2,302	$	2,335	$	2,401	$	1,829	$	3,133
60 – 89 days		315		273		336		62		241
90 days or more		—		—		—		—		—
Nonaccrual loans		9,216		10,099		11,599		11,119		14,087
Total past due and nonaccrual loans	$	11,833	$	12,707	$	14,336	$	13,010	$	17,461
Loans past due 90 days or more	$	—	$	—	$	—	$	—	$	—
Nonaccrual loans		9,216		10,099		11,599		11,119		14,087
OREO		6,821		7,098		12,322		17,861		19,214
Other repossessed assets		—		—		—	��	—		—
Total non-performing assets	$	16,037	$	17,197	$	23,921	$	28,980	$	33,301

In addition to nonaccrual loans and OREO, loans classified as Troubled Debt Restructures (TDRs) and on accrual totaled $5.4 million at December 31, 2016, compared to $6.1 million at September 30, 2016, and $17.4 million at December 31, 2015.

Non-interest Income – Non-interest income was unchanged at $1.1 million for the fourth quarter of 2016 as compared to the third quarter of 2016 and the fourth quarter of 2015.

Non-interest income decreased $2.9 million to $4.8 million for the year ended December 31, 2016, compared with $7.7 million for the year ended December 31, 2015. The decrease in non-interest income was primarily due to a $1.6 million decrease in net gain on sale and call of securities. Non-interest income for 2015 was positively impacted by 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 increased $7.7 million to $15.6 million for the fourth quarter of 2016 compared with $7.9 million for the third quarter of 2016, and increased $4.1 million compared with $11.6 million for the fourth quarter of 2015. The increase from the third quarter of 2016 was due primarily to the accrual of the punitive damages and statutory interest totaling $8.0 million related to the Kentucky Court of Appeals matter discussed above.

Non-interest expense decreased $5.4 million to $39.6 million for the year ended December 31, 2016, compared with $45.0 million for the year ended December 31, 2015. The decrease in non-interest expense was due primarily to lower OREO expenses, which decreased $10.8 million to $1.5 million in 2016 from $12.3 million in 2015. The size of the OREO portfolio declined from $46.2 million to $19.2 million to $6.8 million at December 31, 2014, 2015, and 2016, respectively. Non-interest expense also benefited from declining professional fees expense, FDIC insurance expense, and state franchise and deposit tax expense. These decreases were partially offset by the Kentucky Court of Appeals matter discussed above.

Capital – At December 31, 2016, PBI Bank’s Tier 1 leverage ratio was 6.24% compared with 6.08% at December 31, 2015, and its Total risk-based capital ratio was 9.88% at December 31, 2016, compared with 10.58% at December 31, 2015. Both are below the minimums of 9.0% and 12.0% required by PBI Bank’s consent order. At December 31, 2016, Porter Bancorp’s leverage ratio was 5.27% compared with 4.74% at December 31, 2015, and its Total risk-based capital ratio was 10.21%, compared with 10.46% at December 31, 2015. At December 31, 2016, PBI Bank’s Common equity Tier I risk-based capital ratio was 8.28% compared with 8.84% at December 31, 2015. Porter Bancorp’s Common equity Tier I risk-based capital ratio was 5.20% compared with 5.09% at December 31, 2015.

As previously announced on December 16, 2016, the Company completed a 1-for-5 reverse stock split of its issued and outstanding common and non-voting common shares. As a result of the reverse stock split, all share and per share data has been adjusted in the accompanying tables. Preferred shares were not impacted by the 1-for-5 reverse stock split.

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 December 31, 2016 follows.

PORTER BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share data)
	Three Months Ended									Years Ended
	12/31/16			9/30/16			12/31/15			12/31/16				12/31/15
Income Statement Data
Interest income	$	8,781		$	8,931		$	9,025		$		35,602		$	36,574
Interest expense		1,465			1,473			1,585				5,981			7,023
Net interest income		7,316			7,458			7,440				29,621			29,551
Provision (negative provision) for loan losses		(550	)		(750	)		(2,300	)			(2,450	)		(4,500	)
Net interest income after provision		7,866			8,208			9,740				32,071			34,051
Service charges on deposit accounts		536			520			475				1,958			1,851
Bank card interchange fees		212			214			195				849			839
Other real estate owned income		5			46			237				456			1,346
Bank owned life insurance income		101			101			66				417			295
Gains (losses) on sales and calls of securities, net		29			(16	)		70				216			1,766
Gain on extinguishment of debt		—			—			—				—			883
Other		233			240			181				868			715
Non-interest income		1,116			1,105			1,224				4,764			7,695
Salaries & employee benefits		3,884			3,945			4,062				15,508			15,857
Occupancy and equipment		1,013			842			936				3,517			3,449
Professional fees		317			374			572				1,568			2,885
FDIC insurance		202			442			539				1,660			2,212
Data processing expense		298			295			268				1,185			1,128
State franchise and deposit tax		200			255			265				965			1,120
Other real estate owned expense		257			322			3,506				1,541			12,302
Litigation and loan collection expense		8,230			222			246				8,805			1,141
Other		1,219			1,223			1,171				4,818			4,865
Non-interest expense		15,620			7,920			11,565				39,567			44,959
Income (loss) before income taxes		(6,638	)		1,393			(601	)			(2,732	)		(3,213	)
Income tax expense (benefit)		—			—			—				21			—
Net income (loss)		(6,638	)		1,393			(601	)			(2,753	)		(3,213	)
Less:
Earnings (loss) allocated to participating securities		(202	)		46			(22	)			(88	)		(336	)
Net income (loss) attributable to common	$	(6,436	)	$	1,347		$	(579	)	$		(2,665	)	$	(2,877	)
Weighted average shares – Basic		6,035,403			6,016,216			5,193,414			5,788,713				4,649,002
Weighted average shares – Diluted		6,035,403			6,016,216			5,193,414			5,788,713				4,649,002
Basic earnings (loss) per common share	$	(1.07	)	$	0.22		$	(0.11	)	$	(0.46		)	$	(0.62	)
Diluted earnings (loss) per common share	$	(1.07	)	$	0.22		$	(0.11	)	$	(0.46		)	$	(0.62	)
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 Months Ended									Years Ended
	12/31/16			9/30/16			12/31/15			12/31/16			12/31/15
Average Balance Sheet Data
Assets	$	925,721		$	917,625		$	954,934		$	929,140		$	984,419
Loans		619,640			626,095			619,506			621,275			635,948
Earning assets		878,470			864,307			900,418			875,262			917,546
Deposits		847,168			839,926			882,046			852,717			907,785
Long-term debt and advances		27,753			27,270			28,421			27,675			32,062
Interest bearing liabilities		748,159			748,585			793,182			760,656			826,858
Stockholders’ equity		42,696			42,170			33,697			39,423			33,083
Performance Ratios
Return on average assets		(2.85)	%		0.60	%		(0.25)	%		(0.30)	%		(0.33)	%
Return on average equity		(61.85)			13.14			(7.08)			(6.98)			(9.71)
Yield on average earning assets (tax equivalent)		4.01			4.15			4.02			4.11			4.03
Cost of interest bearing liabilities		0.78			0.78			0.79			0.79			0.85
Net interest margin (tax equivalent)		3.35			3.47			3.32			3.42			3.27
Efficiency ratio		185.89			92.32			134.57			115.80			126.72
Loan Charge-off Data
Loans charged-off	$	(547	)	$	(405	)	$	(961	)	$	(2,629	)	$	(6,132	)
Recoveries		575			540			1,104			2,005			3,309
Net recoveries (charge-offs)	$	28		$	135		$	143		$	(624	)	$	(2,823	)
Nonaccrual Loan Activity
Nonaccrual loans at beginning of period	$	10,099		$	11,599		$	16,987		$	14,087		$	47,175
Net principal pay-downs		(1,251	)		(592	)		(2,472	)		(5,286	)		(27,590	)
Charge-offs		(434	)		(303	)		(756	)		(1,725	)		(5,126	)
Loans foreclosed and transferred to OREO		(30	)		(667	)		(1,063	)		(1,273	)		(5,503	)
Loans returned to accrual status		(283	)		(402	)		(29	)		(1,034	)		(1,629	)
Loans placed on nonaccrual during the period		1,115			464			1,420			4,447			6,760
Nonaccrual loans at end of period	$	9,216		$	10,099		$	14,087		$	9,216		$	14,087
Troubled Debt Restructurings (TDRs)
Accruing	$	5,350		$	6,114		$	17,440		$	5,350		$	17,440
Nonaccrual		3,374			3,379			3,544			3,374			3,544
Total	$	8,724		$	9,493		$	20,984		$	8,724		$	20,984
Other Real Estate Owned (OREO) Activity
OREO at beginning of period	$	7,098		$	12,322		$	29,177		$	19,214		$	46,197
Real estate acquired		30			667			1,063			1,273			5,513
Valuation adjustment write-downs		(210	)		(320	)		(2,775	)		(1,180	)		(9,855	)
Proceeds from sales of properties		(98	)		(5,623	)		(8,150	)		(12,708	)		(22,567	)
Gain (loss) on sales, net		1			52			(101	)		222			(74	)
OREO at end of period	$	6,821		$	7,098		$	19,214		$	6,821		$	19,214

PORTER BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share data)
	As of
	12/31/16			9/30/16			6/30/16			3/31/16			12/31/15
Assets
Loans	$	639,236		$	621,697		$	624,136		$	619,827		$	618,666
Allowance for loan losses		(8,967	)		(9,489	)		(10,104	)		(11,340	)		(12,041	)
Net loans		630,269			612,208			614,032			608,487			606,625
Loans held for sale		—			134			—			113			186
Securities held to maturity		41,818			41,883			41,948			42,011			42,075
Securities available for sale		152,790			142,433			143,145			141,525			144,978
Federal funds sold & interest bearing deposits		56,867			57,578			49,313			72,209			85,329
Cash and due from financial institutions		9,449			6,266			8,289			8,097			8,006
Premises and equipment		17,848			18,481			18,618			18,751			18,812
Bank owned life insurance		14,838			14,741			14,646			14,531			9,441
FHLB Stock		7,323			7,323			7,323			7,323			7,323
Other real estate owned		6,821			7,098			12,322			17,861			19,214
Accrued interest receivable and other assets		7,154			7,135			6,916			7,251			6,733
Total Assets	$	945,177		$	915,280		$	916,552		$	938,159		$	948,722
Liabilities and Equity
Certificates of deposit	$	444,639		$	454,742		$	461,183		$	478,965		$	499,827
Interest checking		103,876			88,386			90,806			96,465			97,515
Money market		142,497			140,995			135,643			134,684			125,935
Savings		34,518			33,816			34,616			35,197			34,677
Total interest bearing deposits		725,530			717,939			722,248			745,311			757,954
Demand deposits		124,395			119,005			117,843			120,302			120,043
Total deposits		849,925			836,944			840,091			865,613			877,997
FHLB advances		22,458			2,619			2,775			2,932			3,081
Junior subordinated debentures		24,150			24,375			24,600			24,825			25,050
Accrued interest payable and other liabilities		15,911			7,721			7,651			10,181			10,577
Total liabilities		912,444			871,659			875,117			903,551			916,705
Preferred stockholders’ equity		2,771			2,771			2,771			2,771			2,771
Common stockholders’ equity		29,962			40,850			38,664			31,837			29,246
Total stockholders’ equity		32,733			43,621			41,435			34,608			32,017
Total Liabilities and Stockholders’ Equity	$	945,177		$	915,280		$	916,552		$	938,159		$	948,722
Ending shares outstanding		6,224,533			6,222,994			6,223,661			5,388,836			5,389,507
Book value per common share	$	4.81		$	6.56		$	6.21		$	5.91		$	5.43
Tangible book value per common share		4.79			6.53			6.16			5.83			5.33

PORTER BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share data)
	As of
	12/31/16			9/30/16			6/30/16			3/31/16			12/31/15
Asset Quality Data
Loan 90 days or more past due still on accrual	$	—		$	—		$	—		$	—		$	—
Nonaccrual loans		9,216			10,099			11,599			11,119			14,087
Total non-performing loans		9,216			10,099			11,599			11,119			14,087
Real estate acquired through foreclosures		6,821			7,098			12,322			17,861			19,214
Other repossessed assets		—			—			—			—			—
Total non-performing assets	$	16,037		$	17,197		$	23,921		$	28,980		$	33,301
Non-performing loans to total loans		1.44	%		1.62	%		1.86	%		1.79	%		2.28	%
Non-performing assets to total assets		1.70			1.88			2.61			3.09			3.51
Allowance for loan losses to non-performing loans		97.30			93.96			87.11			101.99			85.48
Allowance for loans evaluated individually	$	399		$	339		$	146		$	464		$	428
Loans evaluated individually for impairment		15,131			16,214			25,535			26,236			31,776
Allowance as % of loans evaluated individually		2.64	%		2.09	%		0.57	%		1.77	%		1.35	%
Allowance for loans evaluated collectively	$	8,568		$	9,150		$	9,958		$	10,876		$	11,613
Loans evaluated collectively for impairment		624,105			605,483			598,601			593,591			586,890
Allowance as % of loans evaluated collectively		1.37	%		1.51	%		1.66	%		1.83	%		1.98	%
Allowance for loan losses to total loans		1.40	%		1.53	%		1.62	%		1.83	%		1.95	%
Loans by Risk Category
Pass	$	586,430		$	551,075		$	547,853		$	534,451		$	517,484
Watch		30,431			46,049			50,024			59,265			63,363
Special Mention		497			603			622			1,383			1,395
Substandard		21,878			23,970			25,637			24,728			36,424
Doubtful		—			—			—			—			—
Total	$	639,236		$	621,697		$	624,136		$	619,827		$	618,666
Risk-based Capital Ratios - Company
Tier I leverage ratio		5.27	%		6.21	%		5.87	%		5.03	%		4.74	%
Common equity Tier I risk-based capital ratio		5.20			6.37			6.11			5.21			5.09
Tier I risk-based capital ratio		6.99			8.48			8.16			7.03			6.89
Total risk-based capital ratio		10.21			11.57			11.31			10.46			10.46
Risk-based Capital Ratios – PBI Bank
Tier I leverage ratio		6.24	%		6.97	%		6.65	%		6.39	%		6.08	%
Common equity Tier I risk-based capital ratio		8.28			9.53			9.22			8.94			8.84
Tier I risk-based capital ratio		8.28			9.53			9.22			8.94			8.84
Total risk-based capital ratio		9.88			11.18			10.87			10.64			10.58
FTE employees		238			233			239			246			244

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