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Porter Bancorp Reports 1st Quarter 2018 Net Income of $1.9 million or $0.31 per Diluted Share

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Porter Bancorp, Inc. (NASDAQ:PBIB) ("the Company"), parent company of
Limestone Bank ("the Bank"), today reported unaudited results for the
first quarter of 2018. The Company reported net income available to
common shareholders for the first quarter of 2018 of $1.9 million, or
$0.31 per basic and diluted common share, compared to net income
available to common shareholders of $1.6 million, or $0.27 per basic and
diluted share, for the first quarter of 2017.

"We are pleased with the favorable financial results for the first
quarter of 2018 which were largely driven by quality loan production,
net interest income growth, and expense management," said John T.
Taylor, President and CEO. "We are also pleased with the $14.95 million
private placement of common stock completed on March 30, 2018, which
will provide capital to support the growth of our banking franchise."

Rebranding – Effective February, 20, 2018, the Bank changed its
name to Limestone Bank. We believe the new name reflects the Bank's
Kentucky heritage, which can be traced back more than 110 years.
Changing the name of Porter Bancorp, Inc. to Limestone Bancorp, Inc. is
on the agenda for the 2018 annual meeting of shareholders.

Net Interest Income – Net interest income before provision
expense increased to $8.2 million for the first quarter of 2018,
compared with $8.0 million in the fourth quarter of 2017, and $7.7
million in the first quarter of 2017. Average loans increased to $724.2
million for the first quarter of 2018, compared with $695.6 million in
the fourth quarter of 2017 and $649.3 million in the first quarter of
2017. Net interest margin increased to 3.63% in the first quarter of
2018, compared with 3.50% in the fourth quarter of 2017 and 3.55% in the
first quarter of 2017.

Our yield on earning assets improved to 4.45% in the first quarter of
2018, compared to 4.24% in the fourth quarter of 2017 and 4.23% in the
first quarter of 2017. The cost of interest bearing liabilities was
0.96% in the first quarter of 2018, compared to 0.88% for the fourth
quarter of 2017, and 0.78% in the first quarter of 2017.

Provision and Allowance for Loan Losses There was no
provision for loan losses in the first quarter of 2017 or 2018 due to
ongoing improvements in asset quality and management's assessment of
risk in the loan portfolio.

The allowance for loan losses to total loans was 1.17% at March 31,
2018, compared to 1.15% at December 31, 2017, and 1.35% at March 31,
2017. The reduced level of the allowance from a year over year
comparison is primarily driven by declining historical charge-off levels
and improving trends in credit quality. Net loan recoveries were
$324,000 for the first quarter of 2018, compared to net recoveries of
$25,000 for the fourth quarter of 2017, and net charge-offs of $1,000
for the first quarter of 2017.

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 $8.8 million, or 0.88% of
total assets at March 31, 2018, compared with $9.9 million, or 1.02% of
total assets at December 31, 2017, and $14.7 million, or 1.56% of total
assets at March 31, 2017.

Non-performing loans decreased to $4.4 million, or 0.60% of total loans
at March 31, 2018, compared with $5.5 million, or 0.77% of total loans
at December 31, 2017, and decreased from $8.1 million, or 1.22% of total
loans at March 31, 2017. The decrease from the previous quarter was
primarily driven by $995,000 in principal payments received on
nonaccrual loans. OREO remained unchanged at March 31, 2018, at $4.4
million, compared to December 31, 2017, and decreased compared to $6.6
million at March 31, 2017. The Company acquired $110,000 in OREO and
sold $70,000 in OREO during the first quarter of 2018. Fair value
write-downs arising from lower marketing prices or new appraisals
totaled $60,000 in the first quarter of 2018, compared with $1.9 million
in the fourth quarter of 2017, and no write-downs in the first quarter
of 2017.

In addition to nonaccrual loans and OREO, loans classified as Troubled
Debt Restructures (TDRs) and on accrual totaled $922,000 at March 31,
2018, compared to $1.2 million at December 31, 2017 and March 31, 2017.

Non-interest Income and Expense – Non-interest income for the
first quarter of 2018 increased $59,000 to $1.3 million, compared with
$1.2 million for the first quarter of 2017. The increase from the first
quarter of 2017 was primarily due to an increase in bank card
interchange fees of $64,000 as well as an increase in service charges on
deposit accounts of $67,000. These increases were partially offset by a
decrease in other non-interest income of $69,000.

Non-interest expense decreased $84,000, or 1.20% to $7.2 million for the
first quarter of 2018, compared with $7.3 million for the first quarter
of 2017.

Capital – The Company completed a private placement of common
stock on March 30, 2018. In the transaction, the Company issued 150,000
common shares and 1.0 million non-voting common shares to Patriot
Financial Partners III, L.P. at $13.00 per share resulting in total
proceeds of $14.950 million of which $5.0 million was contributed as
capital to the Bank. The balance of the proceeds will be used for
general corporate purposes and to support the growth of the Bank.

At March 31, 2018, the Bank's Tier 1 leverage ratio was 9.31%, compared
with 8.70% at December 31, 2017, and its Total risk-based capital ratio
was 12.43% at March 31, 2018, compared with 11.61% at December 31, 2017.
At March 31, 2018, the Bank's Common equity Tier 1 risk-based capital
ratio was 11.18%, compared with 10.35% at December 31, 2017. At March
31, 2018, the Company's Tier 1 leverage ratio was 9.18%, compared with
7.11% at December 31, 2017, and its Total risk-based capital ratio was
12.56%, compared with 10.55% at December 31, 2017. At March 31, 2018,
the Company's Common equity Tier 1 risk-based capital ratio was 8.98%,
compared with 6.92% at December 31, 2017.

Deferred Tax Assets and Liabilities The Company has a
net deferred tax asset of $31.0 million at March 31, 2018. Deferred tax
assets and liabilities are shown below:

           
March 31, December 31,
2018 2017
(in thousands)
Deferred tax assets:
Net operating loss carry-forward $ 25,362 $ 25,645
Allowance for loan losses 1,790 1,723
Other real estate owned write-down 2,445 2,432
Other   2,269   2,388
  31,866   32,188
 
Deferred tax liabilities:
FHLB stock dividends 557 557
Other   312   318
  869   875
Net deferred tax asset $ 30,997 $ 31,313
 

About Porter Bancorp, Inc.

Porter Bancorp, Inc. (NASDAQ:PBIB) is a Louisville, Kentucky-based bank
holding company which operates banking centers in 12 counties through
its wholly-owned subsidiary Limestone Bank. Our markets include
metropolitan Louisville in Jefferson County and the surrounding counties
of Henry and Bullitt, and extend south along the Interstate 65 corridor.
We serve southern and south central Kentucky from banking centers in
Butler, Green, Hart, Edmonson, Barren, Warren, Ohio and Daviess
counties. We also have a banking center in Lexington, Kentucky, the
second largest city in the state. Limestone Bank is a traditional
community bank with a wide range of personal and business banking
products and services.

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 that involve risks and uncertainties.
Although the Company's management believes the assumptions underlying
the forward-looking statements contained herein are reasonable, any of
these assumptions could be inaccurate. Therefore, there can be no
assurance the forward-looking statements included herein will prove to
be accurate. Factors that could cause actual results to differ from
those discussed in forward-looking statements include, but are not
limited to: economic conditions both generally and more specifically in
the markets in which the Company and its subsidiaries operate;
competition for the Company's customers from other providers of
financial services; government legislation and regulation, which change
from time to time and over which the Company has no control; changes in
interest rates; material unforeseen changes in liquidity, results of
operations, or financial condition of the Company's customers; and other
risks detailed in the Company's filings with the Securities and Exchange
Commission, all of which are difficult to predict and many of which are
beyond the control of the Company. See Risk Factors outlined in the
Company's Form 10-K for the year ended December 31, 2017.

Additional Information

Unaudited supplemental financial information for the first quarter
ending March 31, 2018, follows.

   

PORTER BANCORP, INC.

Unaudited Financial Information

(in thousands, except share and per share data)

 
 
Three Months Ended
3/31/18     12/31/17     3/31/17

 

 

 

Income Statement Data
Interest income $ 10,015 $ 9,717 $ 9,225
Interest expense 1,834 1,716 1,484  

 

 

Net interest income 8,181 8,001 7,741
Provision (negative provision) for loan losses     (800

)

   

 

Net interest income after provision 8,181 8,801 7,741
 
Service charges on deposit accounts 568 636 501
Bank card interchange fees 401 403 337
Bank owned life insurance income 99 103 102
Gains (loss) on sales and calls of securities, net 293
Other 183 207 252  

 

 

Non-interest income 1,251 1,642 1,192
 
Salaries & employee benefits 3,788 3,657 3,947
Occupancy and equipment 895 919 821
Professional fees 205 202 303
Marketing expense 300 218 254
FDIC insurance 182 357 342
Data processing expense 324 325 292
State franchise and deposit tax 282 281 225
Other real estate owned expense 82 1,881 (16

)

Litigation and loan collection expense 53 58 3
Other 1,058 1,174 1,082  

 

Non-interest expense 7,169 9,072 7,253
 
Income before income taxes 2,263 1,371 1,680
Income tax expense (benefit) 329 (31,899 )  

 

 

 

Net income 1,934 33,270 1,680
Less:
Earnings allocated to participating securities 34 797 44  
 
Net income attributable to common $ 1,900 $ 32,473 $ 1,636  

 

 

 

 
Weighted average shares – Basic 6,173,397 6,109,991 6,063,026
Weighted average shares – Diluted 6,173,397 6,109,991 6,063,026
 
Basic earnings per common share $ 0.31 $ 5.31 $ 0.27
Diluted earnings per common share $ 0.31 $ 5.31 $ 0.27
Cash dividends declared per common share $ 0.00 $ 0.00 $ 0.00
 

 

PORTER BANCORP, INC.

Unaudited Financial Information

(in thousands, except share and per share data)

   
 
Three Months Ended
3/31/18     12/31/17     3/31/17

 

 

 

Average Balance Sheet Data
Assets $ 987,390 $ 960,269 $ 937,616
Loans 724,203 695,646 649,325
Earning assets 915,762 916,561 892,292
Deposits 834,695 862,625 853,556
Long-term debt and advances 74,063 50,335 35,956
Interest bearing liabilities 777,140 774,507 767,461
Stockholders' equity 73,205 41,397 33,732
 
 
Performance Ratios
Return on average assets 0.79 % 13.75 % 0.73 %
Return on average equity 10.71 318.85 20.20
Yield on average earning assets (tax equivalent) 4.45 4.24 4.23
Cost of interest bearing liabilities 0.96 0.88 0.78
Net interest margin (tax equivalent) 3.63 3.50 3.55
Efficiency ratio 76.01 97.03 81.19
 
 
Loan Charge-off Data
Loans charged-off $ (47 ) $ (201 ) $ (326 )
Recoveries   371     226     325  
Net recoveries (charge-offs) $ 324 $ 25 $ (1 )
 
 
Nonaccrual Loan Activity
Nonaccrual loans at beginning of period $ 5,457 $ 5,769 $ 9,216
Net principal pay-downs (995 ) (488 ) (1,452 )
Charge-offs (1 ) (137 ) (229 )
Loans foreclosed and transferred to OREO (110 ) (100 )
Loans returned to accrual status (136 )
Loans placed on nonaccrual during the period   19     313     803  
Nonaccrual loans at end of period $ 4,370   $ 5,457   $ 8,102  
 
 
Troubled Debt Restructurings (TDRs)
Accruing $ 922 $ 1,217 $ 1,244
Nonaccrual   1,362     1,829     3,374  
Total $ 2,284 $ 3,046 $ 4,618
 
Other Real Estate Owned (OREO) Activity
OREO at beginning of period $ 4,409 $ 6,330 $ 6,821
Real estate acquired 110 100
Valuation adjustment write-downs (60 ) (1,865 )
Proceeds from sales of properties (70 ) (55 ) (388 )
Gain (loss) on sales, net   (4 )   (1 )   38  
OREO at end of period $ 4,385   $ 4,409   $ 6,571  
 

   

PORTER BANCORP, INC.

Unaudited Financial Information

(in thousands, except share and per share data)

 
 
As of
3/31/18     12/31/17     9/30/17     6/30/17     3/31/17
       
Assets
Loans $ 729,432 $ 712,115 $ 682,511 $ 654,938 $ 664,183
Allowance for loan losses   (8,526 )   (8,202 )   (8,977 )   (8,885 )   (8,966 )
Net loans 720,906 703,913 673,534 646,053 655,217
Loans held for sale 70
Securities held to maturity 41,424 41,635 41,752
Securities available for sale 160,812 152,720 149,797 154,993 156,001
Federal funds sold & interest bearing deposits 30,073 25,966 37,812 51,413 32,329
Cash and due from financial institutions 7,610 8,137 9,557 9,297 5,456
Premises and equipment 16,789 16,789 16,975 17,164 17,687
Bank owned life insurance 15,323 15,229 15,131 15,033 14,935
FHLB Stock 7,323 7,323 7,323 7,323 7,323
Other real estate owned 4,385 4,409 6,330 6,318 6,571
Deferred taxes, net 30,997 31,313
Accrued interest receivable and other assets   5,886     4,932     5,082     5,228     5,083  
Total Assets $ 1,000,104   $ 970,801   $ 962,965   $ 954,457   $ 942,354  
 
Liabilities and Equity
Certificates of deposit $ 431,921 $ 424,235 $ 445,577 $ 458,068 $ 470,029
Interest checking 92,048 99,383 94,523 97,169 104,811
Money market 150,974 151,388 156,905 153,700 122,434
Savings   35,984     34,632     35,946     36,363     36,380  
Total interest bearing deposits 710,927 709,638 732,951 745,300 733,654
Demand deposits   135,984     137,386     133,896     129,518     127,049  
Total deposits 846,911 847,024 866,847 874,818 860,703
FHLB advances 26,752 11,797 16,847 2,158 17,313
Junior subordinated debentures 23,025 23,250 23,475 23,700 23,925
Senior debt 10,000 10,000 10,000 10,000
Accrued interest payable and other liabilities   5,186     6,057     5,728     5,388     4,908  
Total liabilities 911,874 898,128 922,897 916,064 906,849
 
Preferred stockholders' equity 2,771 2,771 2,771 2,771 2,771
Common stockholders' equity   85,459     69,902     37,297     35,622     32,734  
Total stockholders' equity   88,230     72,673     40,068     38,393     35,505  
Total Liabilities and Stockholders' Equity $ 1,000,104   $ 970,801   $ 962,965   $ 954,457   $ 942,354  
 
Ending shares outstanding 7,409,864 6,259,864 6,259,864 6,259,864 6,247,520
Book value per common share $ 11.53 $ 11.17 $ 5.96 $ 5.69 $ 5.24
Tangible book value per common share 11.53 11.17 5.96 5.69 5.23
 

   

PORTER BANCORP, INC.

Unaudited Financial Information

(in thousands, except share and per share data)

 
 
As of
3/31/18     12/31/17     9/30/17     6/30/17     3/31/17
Asset Quality Data
Loan 90 days or more past due still on accrual $ $ 1 $ $ $
Nonaccrual loans   4,370     5,457     5,769     6,509     8,102  
Total non-performing loans 4,370 5,458 5,769 6,509 8,102
Real estate acquired through foreclosures 4,385 4,409 6,330 6,318 6,571
Other repossessed assets                    
Total non-performing assets $ 8,755   $ 9,867   $ 12,099   $ 12,827   $ 14,673  
 
Non-performing loans to total loans 0.60 % 0.77 % 0.85 % 0.99 % 1.22 %
Non-performing assets to total assets 0.88 1.02 1.26 1.34 1.56
Allowance for loan losses to non-performing loans 195.10 150.27 155.61 136.50 110.66
 
Allowance for loans evaluated individually $ 282 $ 219 $ 425 $ 254 $ 332
Loans evaluated individually for impairment 5,775 7,173 7,509 8,273 9,891
Allowance as % of loans evaluated individually 4.88 % 3.05 % 5.66 % 3.07 % 3.36 %
 
Allowance for loans evaluated collectively $ 8,244 $ 7,983 $ 8,552 $ 8,631 $ 8,634
Loans evaluated collectively for impairment 723,657 704,942 675,002 646,665 654,292
Allowance as % of loans evaluated collectively 1.14 % 1.13 % 1.27 % 1.33 % 1.32 %
 
Allowance for loan losses to total loans 1.17 % 1.15 % 1.32 % 1.36 % 1.35 %
 
Loans by Risk Category
Pass $ 695,507 $ 673,033 $ 633,203 $ 610,356 $ 617,361
Watch 17,938 25,715 35,167 29,433 26,442
Special Mention 162 164 598 604 492
Substandard 15,825 13,203 13,543 14,545 19,888
Doubtful                    
Total $ 729,432 $ 712,115 $ 682,511 $ 654,938 $ 664,183
 
Loans by Past Due Status
Past due loans:
30 – 59 days $ 6,402 $ 1,478 $ 872 $ 1,328 $ 972
60 – 89 days 472 171 612 765 289
90 days or more 1
Nonaccrual loans   4,370     5,457     5,769     6,509     8,102  
Total past due and nonaccrual loans $ 11,244 $ 7,107 $ 7,253 $ 8,602 $ 9,363
 
Risk-based Capital Ratios - Company
Tier I leverage ratio 9.18 % 7.11 % 5.85 % 5.65 % 5.43 %
Common equity Tier I risk-based capital ratio 8.98 6.92 5.49 5.58 5.29
Tier I risk-based capital ratio 11.03 8.44 7.31 7.46 7.09
Total risk-based capital ratio 12.56 10.55 10.05 10.44 10.15
 
Risk-based Capital Ratios – Limestone Bank
Tier I leverage ratio 9.31 % 8.70 % 7.73 % 7.54 % 6.37 %
Common equity Tier I risk-based capital ratio 11.18 10.35 9.66 9.97 8.33
Tier I risk-based capital ratio 11.18 10.35 9.66 9.97 8.33
Total risk-based capital ratio 12.43 11.61 11.10 11.50 9.89
 
FTE employees 214 217 217 221 230
 

Non-GAAP Financial Measures Reconciliation

Tangible book value per common share is a non-GAAP financial measure
derived from GAAP-based amounts. We calculate tangible book value per
common share by excluding the balance of intangible assets from common
stockholders' equity. We calculate tangible book value per common share
by dividing tangible common equity by common shares outstanding, as
compared to book value per common share, which we calculate by dividing
common stockholders' equity by common shares outstanding. We believe
this is consistent with bank regulatory agency treatment, which excludes
tangible assets from the calculation of risk-based capital.

The efficiency ratio is a non-GAAP measure of expense control relative
to revenue from net interest income and fee income. We calculate the
efficiency ratio by dividing total non-interest expenses as determined
under GAAP by net interest income and total non-interest income, but
excluding net gains on the sale of securities from the calculation. We
believe this provides a reasonable measure of primary banking expenses
relative to primary banking revenue.

   
As of
3/31/18     12/31/17     9/30/17     6/30/17     3/31/17
Tangible Book Value Per Share (in thousands, except share and per share data)
 
Common stockholder's equity $ 85,459 $ 69,902 $ 37,297 $ 35,622 $ 32,734
Less: Intangible assets           42
Tangible common equity 85,459 69,902 37,297 35,622 32,692
 
Shares Outstanding   7,409,864   6,259,864   6,259,864   6,259,864   6,247,520
Tangible book value per common share $ 11.53 $ 11.17 $ 5.96 $ 5.69 $ 5.23
Book value per common share 11.53 11.17 5.96 5.69 5.24
 
   
Three Months Ended
3/31/18   12/31/17   3/31/17

 

 

 

Efficiency Ratio (in thousands)
 
Net interest income $ 8,181 $ 8,001 $ 7,741
Non-interest income 1,251 1,642 1,192
Less: Net gain on securities     293  
Revenue used for efficiency ratio   9,432   9,350   8,933
Non-interest expense 7,169 9,072 7,253
 
Efficiency ratio 76.01 % 97.03 % 81.19 %
 

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