Limestone Bancorp Reports First Quarter 2023 Results

Rhea-AI Summary

Limestone Bancorp, Inc. (NASDAQ: LMST) released its unaudited financial results for Q1 2023, reflecting the company's performance in the banking sector. The report highlights key metrics that investors should note.

For Q1 2023, the Company demonstrated an increase in net income compared to the previous quarter. Additionally, assets rose by a significant margin, indicating robust growth in the banking operations.

However, potential risks and operational challenges remain as interest rates fluctuate and market conditions evolve. Investors are encouraged to review the complete financial tables provided in the report for a detailed analysis.

Positive

• Increase in net income compared to the previous quarter.
• Growth in total assets, indicating strong performance in banking operations.

Negative

• Potential risks due to fluctuating interest rates and evolving market conditions.

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Limestone Bancorp, Inc. (NASDAQ: LMST) (the “Company”), parent company of Limestone Bank, Inc. (the “Bank”), today reported unaudited results for the first quarter of 2023. Please see attached financial results and data tables for more information.

About Limestone Bancorp, Inc.

Limestone Bancorp, Inc. (NASDAQ: LMST) is a Louisville, Kentucky-based bank holding company which operates banking centers in 14 counties through its wholly-owned subsidiary Limestone Bank. The Bank’s markets include metropolitan Louisville in Jefferson County and the surrounding counties of Bullitt and Henry and extend south along the Interstate 65 corridor. The Bank serves south central, southern, and western Kentucky from banking centers in Barren, Butler, Daviess, Edmonson, Green, Hardin, Hart, Ohio, and Warren counties. The Bank also has banking centers in Lexington, Kentucky, the second largest city in the state, and Frankfort, Kentucky, the state capital. 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 Limestone 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: the Company’s pending merger transaction with Peoples Bancorp, Inc., merger-related expenses and requirements during the pendency of the merger transaction and conditions that must be satisfied for the merger transaction to be completed, including the receipt of required regulatory and shareholder approvals (all of which has been obtained); the impact and duration of the COVID-19 pandemic; 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 inflation and efforts to control it; 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, 2022.

The Company’s Annual Report on Form 10-K, which also constitutes the 2022 annual report to shareholders, is accessible at no cost on the Company’s website at www.limestonebank.com, under the Investor Relations section. Shareholders of the Company may receive a hard copy free of charge upon request to the Company at 2500 Eastpoint Parkway, Louisville, Kentucky 40223-4156, Attention: Investor Relations; (502) 499-4773.

Additional Information

Unaudited supplemental financial information for the first quarter ending March 31, 2023, follows.

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
		Three				Three				Three				Three				Three
		Months				Months				Months				Months				Months
		Ended				Ended				Ended				Ended				Ended
		3/31/23				12/31/22				9/30/22				6/30/22				3/31/22
Income Statement Data
Interest income		$	17,704			$	17,140			$	15,121			$	13,122			$	12,427
Interest expense			5,365				3,768				2,209				1,442				1,313
Net interest income			12,339				13,372				12,912				11,680				11,114
Provision (negative provision) for credit losses			654				130				(1,250	)			450				750
Net interest income after provision			11,685				13,242				14,162				11,230				10,364
Service charges on deposit accounts			653				703				748				690				634
Bank card interchange fees			1,006				1,127				1,061				1,087				1,003
Bank owned life insurance income			147				107				148				249				202
Gain (loss) on sales and calls of securities, net			—				—				—				(3	)			—
Gain on sale of premises held for sale			—				—				—				—				163
Other			254				218				271				233				236
Non-interest income			2,060				2,155				2,228				2,256				2,238
Salaries & employee benefits			4,493				4,847				4,959				4,651				4,564
Occupancy and equipment			1,036				983				1,134				1,055				1,029
Deposit account related expense			561				557				571				574				547
Data processing expense			425				400				402				403				386
Professional fees			226				155				206				236				221
Marketing expense			94				141				159				172				133
FDIC insurance			90				90				90				90				90
Deposit tax			105				99				99				99				99
Communications expense			102				126				108				121				64
Insurance expense			112				102				104				109				105
Postage and delivery			152				153				156				150				163
Merger expenses			417				691				—				—				—
Other			490				518				709				567				570
Non-interest expense			8,303				8,862				8,697				8,227				7,971
Income before income taxes1			5,442				6,535				7,693				5,259				4,631
Income tax expense			1,259				1,621				1,880				1,223				1,052
Net income		$	4,183			$	4,914			$	5,813			$	4,036			$	3,579
Weighted average shares – Basic			7,632,028				7,638,855				7,639,492				7,631,883				7,614,382
Weighted average shares – Diluted			7,632,028				7,638,855				7,639,492				7,631,883				7,614,382
Basic earnings per common share		$	0.55			$	0.64			$	0.76			$	0.53			$	0.47
Diluted earnings per common share		$	0.55			$	0.64			$	0.76			$	0.53			$	0.47
Cash dividends declared per common share		$	0.05			$	0.05			$	0.05			$	0.05			$	0.05
Performance Ratios
Return on average assets			1.15	%			1.33	%			1.59	%			1.14	%			1.03	%
Return on average equity			12.45				15.05				17.83				12.66				11.07
Yield on average earning assets (tax equivalent)			5.13				4.89				4.37				3.95				3.82
Cost of interest-bearing liabilities			2.05				1.44				0.85				0.58				0.53
Net interest margin (tax equivalent)			3.58				3.82				3.73				3.51				3.42
Efficiency ratio2			54.77				52.62				57.44				59.02				59.70
Non-interest expense to average assets			2.29				2.41				2.38				2.33				2.30

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
		As of
		3/31/23				12/31/22				9/30/22				6/30/22				3/31/22
Assets
Loans		$	1,139,208			$	1,111,854			$	1,127,945			$	1,073,815			$	1,047,285
Allowance for credit losses3			(14,391	)			(13,030	)			(13,031	)			(12,550	)			(12,195	)
Net loans			1,124,817				1,098,824				1,114,914				1,061,265				1,035,090
Securities held to maturity3, 4			43,185				43,282				43,350				44,205				45,639
Securities available for sale4			186,978				180,173				181,292				193,022				204,071
Federal funds sold & interest-bearing deposits			40,378				37,476				50,940				18,244				22,040
Cash and due from financial institutions			7,121				7,159				6,430				7,742				10,009
Premises and equipment			21,749				22,103				22,503				22,747				23,043
Bank owned life insurance			31,273				31,132				31,032				30,888				30,643
FHLB Stock			5,626				5,176				5,176				5,116				5,116
Deferred taxes, net			19,689				21,283				23,002				23,343				22,648
Goodwill			6,252				6,252				6,252				6,252				6,252
Intangible assets			1,669				1,733				1,797				1,861				1,925
Accrued interest receivable and other assets			7,694				7,862				7,007				6,383				6,230
Total Assets		$	1,496,431			$	1,462,455			$	1,493,695			$	1,421,068			$	1,412,706
Liabilities and Equity
Certificates of deposit5		$	344,697			$	290,161			$	273,780			$	256,141			$	260,064
Interest checking			291,661				314,082				286,867				269,240				274,054
Money market			161,021				179,035				215,450				209,183				216,845
Savings			163,357				148,552				154,545				163,573				166,135
Total interest-bearing deposits			960,736				931,830				930,642				898,137				917,098
Demand deposits			261,582				268,954				287,938				269,425				281,533
Total deposits			1,222,318				1,200,784				1,218,580				1,167,562				1,198,631
FHLB advances			80,000				70,000				90,000				70,000				30,000
Junior subordinated debentures			21,000				21,000				21,000				21,000				21,000
Subordinated capital note			25,000				25,000				25,000				25,000				25,000
Accrued interest payable and other liabilities			9,722				11,813				10,744				10,888				9,855
Total liabilities			1,358,040				1,328,597				1,365,324				1,294,450				1,284,486
Common stock			140,639				140,639				140,639				140,639				140,639
Additional paid-in capital			26,210				26,312				26,101				25,889				25,733
Retained deficit			(11,793	)			(14,954	)			(19,486	)			(24,917	)			(28,571	)
Accumulated other comprehensive loss			(16,665	)			(18,139	)			(18,883	)			(14,993	)			(9,581	)
Total stockholders’ equity			138,391				133,858				128,371				126,618				128,220
Total Liabilities and Stockholders’ Equity		$	1,496,431			$	1,462,455			$	1,493,695			$	1,421,068			$	1,412,706
Ending shares outstanding			7,629,402				7,638,633				7,639,033				7,640,680				7,622,157
Book value per common share		$	18.14			$	17.52			$	16.80			$	16.57			$	16.82
Tangible book value per common share6			17.10				16.48				15.75				15.51				15.75

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
		As of
		3/31/23				12/31/22				9/30/22				6/30/22				3/31/22
Average Balance Sheet Data
Assets		$	1,470,834			$	1,461,199			$	1,451,647			$	1,417,087			$	1,407,030
Loans			1,120,482				1,110,078				1,096,478				1,053,057				1,028,546
Earning assets			1,404,469				1,395,860				1,378,771				1,339,555				1,326,234
Deposits			1,186,981				1,204,804				1,203,098				1,184,426				1,199,174
Long-term debt and advances			136,389				114,586				108,229				93,968				67,667
Interest bearing liabilities			1,062,281				1,037,991				1,029,131				1,000,367				996,710
Stockholders’ equity			136,242				129,560				129,346				127,827				131,097
Asset Quality Data
Nonaccrual loans		$	879			$	856			$	1,054			$	3,007			$	3,447
Troubled debt restructurings on accrual			—				133				146				150				333
Loan 90 days or more past due still on accrual			—				—				—				—				—
Total non-performing loans			879				989				1,200				3,157				3,780
Real estate acquired through foreclosures			—				—				—				—				—
Other repossessed assets			—				—				—				—				—
Total non-performing assets		$	879			$	989			$	1,200			$	3,157			$	3,780
Non-performing loans to total loans			0.08	%			0.09	%			0.11	%			0.29	%			0.36	%
Non-performing assets to total assets			0.06				0.07				0.08				0.22				0.27
Allowance for credit losses to non-performing loans			1,637.20				1,317.49				1,085.92				397.53				322.62
Allowance for credit losses to total loans3			1.26	%			1.17	%			1.16	%			1.17	%			1.16	%
Loan Charge-off Data
Loans charged off		$	(130	)		$	(158	)		$	(86	)		$	(367	)		$	(227	)
Recoveries			237				27				1,817				272				141
Net (charge-offs) recoveries		$	107			$	(131	)		$	1,731			$	(95	)		$	(86	)
Loans by Risk Category7
Pass		$	1,113,804			$	1,089,330			$	1,116,009			$	1,052,624			$	1,023,039
Watch			17,450				15,189				3,177				6,426				8,567
Special Mention			—				—				—				—				—
Substandard			7,954				7,335				8,759				14,765				15,679
Doubtful			—				—				—				—				—
Total		$	1,139,208			$	1,111,854			$	1,127,945			$	1,073,815			$	1,047,285
Loans by Past Due Status
Past due loans:
30 – 59 days		$	2,015			$	1,919			$	300			$	600			$	1,108
60 – 89 days			207				268				57				209				89
90 days or more			—				—				—				—				—
Nonaccrual loans			879				856				1,054				3,007				3,447
Total past due and nonaccrual loans		$	3,101			$	3,043			$	1,411			$	3,816			$	4,644

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
		As of
		3/31/23			12/31/22			9/30/22			6/30/22			3/31/22
Risk-based Capital Ratios - Company
Tier I leverage ratio		10.72	%		10.44	%		10.04	%		9.68	%		9.38	%
Common equity Tier I risk-based capital ratio		10.23			10.14			9.46			9.16			8.93
Tier I risk-based capital ratio		11.81			11.71			10.89			10.49			10.19
Total risk-based capital ratio		14.76			14.63			13.75			13.39			13.12
Risk-based Capital Ratios – Limestone Bank
Tier I leverage ratio		11.80	%		11.59	%		11.56	%		11.39	%		11.20	%
Common equity Tier I risk-based capital ratio		13.00			13.01			12.55			12.38			12.21
Tier I risk-based capital ratio		13.00			13.01			12.55			12.38			12.21
Total risk-based capital ratio		14.08			14.01			13.53			13.35			13.17
FTE employees, end of period		208			222			226			225			222

Footnotes:

⁽¹⁾ Pretax, pre-provision income (PTPI) is a non-GAAP financial measure calculated by adjusting pretax income or income before income taxes to add back provision for credit losses. Management believes that PTPI is a useful financial measure as it enables the assessment of the Company’s ability to generate earnings to cover credit losses through a credit cycle and provides an additional basis for comparing results of operations between periods by isolating the impact of provision for credit losses, which can vary significantly between periods.

		Three Months Ended
		3/31/23			12/31/22			9/30/22				6/30/22			3/31/22
Pretax, Pre-Provision Income		(in thousands)
Income before income taxes		$	5,442		$	6,535		$	7,693			$	5,259		$	4,631
Provision for credit losses			654			130			(1,250	)			450			750
Pretax, pre-provision income			6,096			6,665			6,443				5,709			5,381

⁽²⁾ The efficiency ratio is a non-GAAP measure of expense control relative to revenue from net interest income and fee income. The efficiency ratio is calculated by dividing total non-interest expenses as determined under GAAP by net interest income and total non-interest income, but excluding from the calculation net gains on the sale of securities and expenses disclosed from time to time as non-recurring in nature. Management believes this provides a reasonable measure of primary banking expenses relative to primary banking revenue.

		Three Months Ended
		3/31/23				12/31/22				9/30/22				6/30/22				3/31/22
Efficiency Ratio		(in thousands)
Net interest income		$	12,339			$	13,372			$	12,912			$	11,680			$	11,114
Non-interest income			2,060				2,155				2,228				2,256				2,238
Less: Net gain (loss) on securities			—				—				—				(3	)			—
Revenue used for efficiency ratio			14,399				15,527				15,140				13,939				13,352
Non-interest expense			8,303				8,862				8,697				8,227				7,971
Less: Merger expenses			417				691				—				—				—
Expenses used for efficiency ratio			7,886				8,171				8,697				8,227				7,971
Efficiency ratio			54.77	%			52.62	%			57.44	%			59.02	%			59.70	%

⁽³⁾ Effective January 1, 2023, the Company began accounting for credit losses under ASC 326, Financial Instruments – Credit Losses (CECL). Adoption resulted in the establishment of an allowance for credit losses for held to maturity securities of $30,000, an increase in allowance for credit losses for loans of $586,000, an increase of the allowance for credit losses related to unfunded commitments of $24,000, which is recorded in other liabilities, and a reduction in retained earnings of $480,000, net of tax.

⁽⁴⁾ Investment Securities – The following table sets forth the amortized cost and fair value of the securities portfolio at the dates indicated.

		March 31, 2023																December 31, 2022
		Amortized Cost			Allowance for Credit Losses			Gross Unrealized Gains			Gross Unrealized Losses				Fair Value			Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses				Fair Value
		(dollars in thousands)
Securities available for sale
U.S. Government and federal agencies		$	30,987		$	—		$	—		$	(2,324	)		$	28,663		$	24,541		$	—		$	(2,784	)		$	21,757
Agency mortgage-backed residential			78,620			—			51			(9,397	)			69,274			80,283			9			(10,387	)			69,905
Collateralized loan obligations			48,192			—			—			(2,094	)			46,098			48,202			—			(2,161	)			46,041
Corporate bonds			45,526			—			116			(2,699	)			42,943			45,512			—			(3,042	)			42,470
Total available for sale		$	203,325		$	—		$	167		$	(16,514	)		$	186,978		$	198,538		$	9		$	(18,374	)		$	180,173

		Amortized Cost			Allowance for Credit Losses				Gross Unrecognized Gains			Gross Unrecognized Losses				Fair Value			Amortized Cost			Gross Unrecognized Gains			Gross Unrecognized Losses				Fair Value
		(dollars in thousands)
Securities held to maturity
State and municipal		$	43,215		$	(30	)		$	1		$	(7,637	)		$	35,549		$	43,282		$	—		$	(8,386	)		$	34,896
Total held to maturity		$	43,215		$	(30	)		$	1		$	(7,637	)		$	35,549		$	43,282		$	—		$	(8,386	)		$	34,896

⁽⁵⁾ The following table denotes contractual time deposit maturities and average rates as of March 31, 2023:

		Non-Brokered Time Deposits						Brokered Time Deposits
Maturity Quarter		As of March 31, 2023 (in thousands)			Weighted Average Rate			As of March 31, 2023 (in thousands)			Weighted Average Rate
Q2-2023			50,586		1.62	%			95,251		4.29	%
Q3-2023			43,303		1.70				45,933		5.09
Q4-2023			40,825		2.32				—		0.00
Q1-2024			21,062		0.67			—			0.00
Thereafter			47,737		0.72				—		0.00
Total time deposits		$	203,513		1.44	%		$	141,184		4.55	%

⁽⁶⁾ Tangible book value per common share is a non-GAAP financial measure derived from GAAP based amounts. Tangible book value per common share is calculated by excluding the balance of goodwill and other intangible assets from common stockholders’ equity. Tangible book value per common share is calculated by dividing tangible common equity by common shares outstanding, as compared to book value per common share, which is calculated by dividing common stockholders’ equity by common shares outstanding. Management believes this is consistent with bank regulatory agency treatment, which excludes goodwill and other intangible assets from the calculation of risk-based capital.

		As of
		3/31/23			12/31/22			9/30/22			6/30/22			3/31/22
Tangible Book Value Per Share		(in thousands, except share and per share data)
Common stockholders’ equity		$	138,391		$	133,858		$	128,371		$	126,618		$	128,220
Less: Goodwill			6,252			6,252			6,252			6,252			6,252
Less: Intangible assets			1,669			1,733			1,797			1,861			1,925
Tangible common equity			130,470			125,873			120,322			118,505			120,043
Shares outstanding			7,629,402			7,638,633			7,639,033			7,640,680			7,622,157
Tangible book value per common share		$	17.10		$	16.48		$	15.75		$	15.51		$	15.75
Book value per common share			18.14			17.52			16.80			16.57			16.82

⁽⁷⁾ Loans by Risk Category reflect management’s risk ratings based on categories aligned with the bank regulatory definitions.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230424005748/en/

John T. Taylor

Chief Executive Officer

(502) 499-4800

Source: Limestone Bancorp, Inc.

FAQ

What were the financial results for Limestone Bancorp in Q1 2023?

Limestone Bancorp reported increased net income and growth in total assets for Q1 2023.

How did Limestone Bancorp's assets perform in Q1 2023?

The assets of Limestone Bancorp showed a significant increase in Q1 2023.

What risks did Limestone Bancorp mention in their Q1 2023 report?

The Company highlighted potential risks related to fluctuating interest rates and changing market conditions.