LIMESTONE BANCORP, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - PORTER BANCORP, INC. 8-K - LIMESTONE BANCORP, INC.	a50794131.htm

Exhibit 99.1

Porter Bancorp, Inc. Reports Fourth Quarter and 2013 Results

Fourth Quarter 2013 Net Loss Attributable to Common Shareholders of $1.0 million

LOUISVILLE, Ky.--(BUSINESS WIRE)--January 30, 2014--Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, with 18 full-service banking offices in Kentucky, today reported unaudited results for the fourth quarter and year ended 2013.

The Company reported that the net loss attributable to common shareholders declined substantially to $1.0 million, or ($0.09) per diluted share, for the fourth quarter of 2013 compared with a net loss of $7.0 million, or ($0.59) per diluted share, for the fourth quarter of 2012. Net loss attributable to common shareholders for the year ended December 31, 2013 was $3.4 million, or ($0.29) per diluted common share, compared with net loss attributable to common shareholders of $33.4 million, or ($2.85) per diluted share, for the year ended December 31, 2012. The significant reduction in net loss in 2013 compared to 2012 is primarily attributable to the sizeable reduction in provision for loan losses and lower costs related to our other real estate owned portfolio.

Significant progress was made over the past year, reducing losses from $33.4 million in 2012 to $3.4 million in 2013. Our primary initiatives for 2014 are to continue reducing non-performing assets, restore capital, return to sustainable profitability, continue serving our existing customers, and develop new quality financial relationships.

Fourth Quarter 2013 Financial Performance Highlights

Balance Sheet Reduction – Average assets were $1.082 billion in the fourth quarter of 2013 compared with $1.265 billion in the fourth quarter of 2012. This reduction was accomplished primarily by reducing our commercial real estate and construction and development loans within our loan portfolio and through the redemption of higher cost certificates of deposit accounts.
Net Interest Income – Net interest income declined to $7.6 million for the fourth quarter of 2013 compared with $7.8 million in the third quarter of 2013 and $9.6 million in the fourth quarter of 2012 as our average loans declined to $719.2 million for the fourth quarter of 2013 compared with $756.1 million in the third quarter of 2013 and $929.0 million in the fourth quarter of 2012. Our net interest margin declined to 2.96% in the fourth quarter of 2013 compared with 3.14% in the third quarter of 2013 and 3.19% in the fourth quarter of 2012.
Provision for Loan Losses – No provision for loan losses expense was recorded for the fourth quarter of 2013 compared with $7.0 million in the fourth quarter of 2012. Total provision for loan losses expense of $700,000 was recorded for the twelve months ended December 31, 2013, compared with $40.3 million for the twelve months ended December 31, 2012. The significant reduction in provision for loan losses benefited from the downsizing of the loan portfolio, declining historical loss rates, and a reduction in loans migrating downward in risk grade classification. Our reserve for loans evaluated collectively for impairment was 4.41% at December 31, 2013, compared with 4.66% at September 30, 2013 and 5.02% at December 31, 2012.

Non-performing Assets – Non-performing assets, which include loans past due 90 days and still accruing, loans on nonaccrual, and other real estate owned, decreased to $132.9 million, or 12.35% of total assets at December 31, 2013, compared with $148.8 million, or 14.33% of total assets, at September 30, 2013. Non-performing loans and other real estate owned remain at elevated levels and continue to impact negatively the Bank’s earnings performance.

Non-performing loans decreased to $102.0 million, or 14.38% of total loans, at December 31, 2013, compared with $106.9 million, or 14.56% of total loans, at September 30, 2013. Net charge-offs also decreased from $6.1 million in the third quarter of 2013 to $3.6 million in the fourth quarter of 2013. Net charge-offs for the twelve months ended December 31, 2013 decreased to $29.3 million from $36.1 million for the same period in 2012 and were largely related to relieving specific reserves previously established for loans deemed collateral dependent during the period.

Total past due and nonaccrual loans decreased approximately $11.1 million to $113.5 million at December 31, 2013 from $124.5 million at September 30, 2013. Our quarterly past due and nonaccrual loan trend since the prior year is as follows:

		December 31, 2013		September 30, 2013	June 30, 2013		March 31, 2013		December 31, 2012
		(in thousands)
Past Due Loans:
30 – 59 Days	$	10,696	$	10,018	$	8,600	$	8,052	$	38,219
60 – 89 Days		775		7,582		2,979		2,960		20,303
90 Days and Over		232		—		71		—		86

Nonaccrual Loans		101,767		106,922		112,185		120,943		94,517
Total Past Due and Nonaccrual Loans	$	113,470	$	124,522	$	123,835	$	131,955	$	153,125

Additionally, TDRs on accrual totaled $44.3 million at December 31, 2013 compared to $44.0 million at September 30, 2013 and $77.3 million at December 31, 2012. Foreclosed properties at December 31, 2013 decreased to $30.9 million compared with $41.9 million at September 30, 2013, and $43.7 million at December 31, 2012. The Company acquired $2.1 million in other real estate owned and sold $12.2 million in other real estate owned during the fourth quarter of 2013. Fair value write-downs arising from new appraisals or lower marketing prices totaled $882,000 in the fourth quarter of 2013 compared with $2.1 million in the fourth quarter of 2012 and $300,000 in the third quarter of 2013.

Non-interest Expense – Non-interest expense increased $581,000 to $9.0 million for the fourth quarter of 2013 compared with $8.5 million for the third quarter of 2013 and decreased $1.8 million compared with $10.8 million for the fourth quarter of 2012. The increase in non-interest expense for the quarter was attributable primarily to higher loan collection expenses and other real estate owned expenses noted above.
Capital – At December 31, 2013, PBI Bank’s Tier 1 leverage ratio was 6.28% compared with 6.40% at September 30, 2013, and its Total risk-based capital ratio was 11.44% at December 31, 2013 compared with 11.04% at September 30, 2013, which are below the minimums of 9.0% and 12.0% required by the Bank’s Consent Order. At December 31, 2013, Porter Bancorp’s leverage ratio was 4.95% compared with 5.15% at September 30, 2013, and its Total risk-based capital ratio was 11.03% compared with 10.78% at September 30, 2013.

Management and the Board of Directors continue to evaluate appropriate strategies for increasing the Company’s capital in order to meet the capital requirements of our Consent Order. These include, among other things, a possible public offering or private placement of common stock to new and existing shareholders. As previously announced, the Company has engaged a financial advisor to assist the Board of Directors in this evaluation.

PBIB-G

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 fourth quarter ending December 31, 2013 follows.


PORTER BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share data)

	Three			Three			Three			Twelve				Twelve
	Months			Months			Months			Months				Months
	Ended			Ended			Ended			Ended				Ended
	12/31/13			9/30/13			12/31/12			12/31/13				12/31/12

Income Statement Data
Interest income	$	10,259		$	10,543		$	13,175		$		43,228		$	57,729
Interest expense		2,673			2,694			3,601				11,143			15,774
Net interest income		7,586			7,849			9,574				32,085			41,955
Provision for loan losses		—			250			7,000				700			40,250
Net interest income after provision		7,586			7,599			2,574				31,385			1,705

Service charges on deposit accounts		523			536			566				2,058			2,239
Income from fiduciary activities		—			—			374				517			1,177
Bank card interchange fees		176			174			174				718			727
Other real estate owned income		3			54			178				399			420
Gain (loss) on sales of securities, net		(4	)		24			(294	)			723			3,236
Income from bank owned life insurance		75			75			74				534			312
Other		184			304			334				970			1,479
Non-interest income		957			1,167			1,406				5,919			9,590

Salaries & employee benefits		3,526			3,837			4,090				15,501			16,648
Occupancy and equipment		855			884			816				3,583			3,642
Other real estate owned expense		1,399			669			2,883				4,516			10,549
FDIC insurance		511			578			571				2,378			2,835
Franchise tax		333			537			494				1,944			2,174
Loan collection expense		734			531			704				4,707			2,442
Professional fees		484			503			286				1,892			1,985
Communications expense		180			177			187				711			710
Postage and delivery		109			99			115				423			454
Insurance expense		166			171			77				648			373
Other		752			482			610				2,587			2,480
Non-interest expense		9,049			8,468			10,833				38,890			44,292

Income (loss) before income taxes		(506	)		298			(6,853	)			(1,586	)		(32,997	)
Income tax expense (benefit)		—			—			—				—			(65	)
Net income (loss)		(506	)		298			(6,853	)			(1,586	)		(32,932	)
Less:
Dividends on preferred stock		607			437			438				1,919			1,750
Accretion on preferred stock		25			45			45				160			179
Earnings (loss) allocated to participating securities		(110	)		(16	)		(343	)			(267	)		(1,429	)
Net loss attributable to common	$	(1,028	)	$	(168	)	$	(6,993	)	$		(3,398	)	$	(33,432	)

Weighted average shares – Basic		11,907,766			11,592,959			11,762,330			11,794,738				11,746,719
Weighted average shares – Diluted		11,907,766			11,592,959			11,762,330			11,794,738				11,746,719

Basic earnings (loss) per common share	$	(0.09	)	$	(0.01	)	$	(0.59	)	$	(0.29		)	$	(2.85	)
Diluted earnings (loss) per common share	$	(0.09	)	$	(0.01	)	$	(0.59	)	$	(0.29		)	$	(2.85	)
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			Twelve			Twelve
	Months			Months			Months			Months			Months
	Ended			Ended			Ended			Ended			Ended
	12/31/13			9/30/13			12/31/12			12/31/13			12/31/12

Average Balance Sheet Data
Assets	$	1,081,908		$	1,056,300		$	1,264,867		$	1,098,400		$	1,341,565
Loans		719,163			756,132			928,974			788,176			1,033,320
Earning assets		1,033,083			1,006,838			1,207,711			1,050,142			1,281,735
Deposits		989,847			965,501			1,162,015			1,004,052			1,217,083
Long-term debt and advances		35,652			36,123			37,710			36,394			38,634
Interest bearing liabilities		922,519			903,607			1,085,424			937,406			1,144,480
Stockholders’ equity		38,035			37,995			53,229			42,631			75,679


Performance Ratios
Return on average assets		(0.19)	%		0.11	%		(2.16)	%		(0.14)	%		(2.45)	%
Return on average equity		(5.28)			3.11			(51.22)			(3.72)			(43.52)
Yield on average earning assets (tax equivalent)		3.99			4.21			4.38			4.16			4.54
Cost of interest bearing liabilities		1.15			1.18			1.32			1.19			1.38
Net interest margin (tax equivalent)		2.96			3.14			3.19			3.10			3.31
Efficiency ratio		105.87			94.17			96.09			104.32			91.68


Loan Charge-off Data
Loans charged-off	$	(4,171	)	$	(7,071	)	$	(5,008	)	$	(32,608	)	$	(37,515	)
Recoveries		541			1,016			669			3,352			1,366
Net charge-offs	$	(3,630	)	$	(6,055	)	$	(4,339	)	$	(29,256	)	$	(36,149	)


Nonaccrual Loan Activity
Nonaccrual loans at beginning of period	$	106,922		$	112,185		$	88,632		$	94,517		$	92,020
Net principal pay-downs		(5,151	)		(7,408	)		(3,576	)		(24,750	)		(18,668	)
Charge-offs		(3,232	)		(5,388	)		(3,856	)		(29,348	)		(24,512	)
Loans foreclosed and transferred to OREO		(2,064	)		(2,987	)		(1,998	)		(20,606	)		(24,409	)
Loans returned to accrual status		(2,459	)		(678	)		—			(3,558	)		—
Loans placed on nonaccrual during the period		7,751			11,198			15,315			85,512			70,086
Nonaccrual loans at end of period	$	101,767		$	106,922		$	94,517		$	101,767		$	94,517


Troubled Debt Restructurings (TDRs)
Accruing	$	44,346		$	43,968		$	77,344		$	44,346		$	77,344
Nonaccrual		46,916			49,255			40,464			46,916			40,464
Total	$	91,262		$	93,223		$	117,808		$	91,262		$	117,808

Other Real Estate Owned (OREO) Activity (Net of Allowance)
OREO at beginning of period	$	41,857		$	47,030		$	48,837		$	43,671		$	41,449
Real estate acquired		2,064			2,987			1,997			20,606			33,528
Valuation adjustment write-downs		(882	)		(300	)		(2,064	)		(2,466	)		(7,154	)
Proceeds from sales of properties		(12,205	)		(8,029	)		(4,908	)		(30,787	)		(22,481	)
Gain (loss) on sales, net		58			169			(191	)		(132	)		(1,672	)
Capital improvements		—			—			—			—			1
OREO at end of period	$	30,892		$	41,857		$	43,671		$	30,892		$	43,671


PORTER BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share data)

	As of			As of				As of
	12/31/13			9/30/13				12/31/12

Assets
Loans	$	709,326		$		734,240		$	899,092
Loan loss reserve		(28,124	)			(31,754	)		(56,680	)
Net loans		681,202			702,486				842,412
Mortgage loans held for sale		149			123				507
Securities held to maturity		43,612			—				—
Securities available for sale		163,344			193,981				178,476
Federal funds sold & interest bearing deposits		103,669			42,071				41,161
Cash and due from financial institutions		7,465			11,362				8,411
FHLB stock		10,072			10,072				10,072
Premises and equipment		19,983			20,167				20,805
Other real estate owned		30,892			41,857				43,671
Accrued interest receivable and other assets		15,733			16,008				17,116
Total Assets	$	1,076,121		$		1,038,127		$	1,162,631


Liabilities and Equity
Certificates of deposit	$	679,952		$		658,940		$	760,573
Interest checking		84,626				71,851			87,234
Money market		79,349				77,292			63,715
Savings		36,292				37,622			39,227
Total interest bearing deposits		880,219			845,705				950,749
Demand deposits		107,486			101,191				114,310
Total deposits		987,705			946,896				1,065,059
Federal funds purchased & repurchase agreements		2,470			3,722				2,634
FHLB advances		4,492			4,741				5,604
Junior subordinated debentures		30,850			31,075				31,975
Accrued interest payable and other liabilities		14,673			14,578				10,169
Total liabilities		1,040,190			1,001,012				1,115,441
Stockholders’ equity		35,931			37,115				47,190
Total Liabilities and Stockholders’ Equity	$	1,076,121		$		1,038,127		$	1,162,631


Ending shares outstanding		12,840,999				12,846,668			12,002,421
Book value per common share	$	(0.18	)	$		(0.09	)	$	0.74
Tangible book value per common share		(0.29	)			(0.21	)		0.58

Asset Quality Data
Loan 90 days or more past due still on accrual	$	232		$		—		$	86
Nonaccrual loans		101,767				106,922			94,517
Total non-performing loans		101,999			106,922				94,603
Real estate acquired through foreclosures		30,892			41,857				43,671
Other repossessed assets		—			11				—
Total non-performing assets	$	132,891		$		148,790		$	138,274
Non-performing loans to total loans		14.38	%		14.56		%		10.52	%
Non-performing assets to total assets		12.35			14.33				11.89
Allowance for loan losses to non-performing loans		27.57			29.70				59.91
Allowance as % of loans evaluated individually		2.32			3.06				11.14
Allowance as % of loans evaluated collectively		4.41			4.66				5.02
Allowance for loan losses to total loans		3.96			4.32				6.30

Risk-based Capital Ratios
Tier I leverage ratio		4.95	%		5.15		%		4.50	%
Tier I risk-based capital ratio		7.34			7.19				6.46
Total risk-based capital ratio		11.03			10.78				9.81

FTE employees		260			260				278

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

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