Limestone Bancorp Reports Net Income of $4.9 million, or $0.64 per Diluted Share, for the 4th Quarter of 2022 and $18.3 million, or $2.40 per Diluted Share, for the Year Ended December 31, 2022

Rhea-AI Summary

Limestone Bancorp, Inc. (LMST) reported a fourth-quarter net income of $4.9 million, or $0.64 per share, up from $3.4 million, or $0.45 per share, a year earlier. For the full year 2022, net income rose to $18.3 million, or $2.40 per share, compared to $14.9 million, or $1.96 per share in 2021. The results included $691,000 in merger expenses from the pending merger with Peoples Bancorp. The company's net interest income for Q4 2022 was $13.4 million, a growth from $11.0 million in Q4 2021. Additionally, the board declared a quarterly dividend of $0.05 per common share, with a payment date of February 21, 2023.

Positive

• Fourth-quarter net income increased by 44% year-over-year to $4.9 million.
• Full-year net income rose by 23% to $18.3 million.
• Net interest income for Q4 2022 reached $13.4 million, up from $11.0 million in Q4 2021.
• Loan growth of 11% reported, indicating healthy lending activity.
• Net interest margin expanded to 3.82%, up from 3.32% year-over-year.

Negative

• Merger expenses of $691,000 impacted fourth-quarter earnings.
• Non-interest expenses increased by 11% due to merger costs and inflationary pressures on salaries.

Declares Quarterly Dividend of $0.05 per Common Share

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 fourth quarter of 2022. Net income available to common shareholders for the fourth quarter of 2022 was $4.9 million, or $0.64 per basic and diluted common share, compared with $3.4 million, or $0.45 per basic and diluted common share, for the fourth quarter of 2021. Net income for the year ended December 31, 2022, was $18.3 million, or $2.40 per basic and diluted common share, compared with net income of $14.9 million, or $1.96 per basic and diluted common share, for the year ended December 31, 2021. The fourth quarter and year ended 2022 included $691,000 of merger expenses related to the Company’s pending merger transaction with Peoples Bancorp, Inc. and its subsidiary, Peoples Bank, or $0.07 per basic and diluted common share.

John T. Taylor, Chief Executive Officer, noted, “Over the past year, the Limestone team delivered solid results for shareholders and continued to execute for our customers while managing risk in an inflationary environment. The team achieved 11% loan growth, 17% pretax, pre-provision income¹ growth, and a 14% return on average equity. Asset quality remains strong and net interest margin expanded 14 basis points year over year, which is directionally consistent with the Federal Reserve’s tightening actions and our approach to interest rate risk management. Additionally, our team continues to work diligently with the Peoples Bank team to plan and prepare for the completion of our pending merger after required regulatory and shareholder approvals are received.”

Also today, the Board of Directors declared a quarterly cash dividend of $0.05 per common share. The dividend will be paid on February 21, 2023, to shareholders of record as of February 6, 2023.

Net Interest Income and Average Earning Assets – Net interest income increased to $13.4 million for the fourth quarter of 2022, compared to $12.9 million for the third quarter of 2022, and $11.0 million for the fourth quarter of 2021. Net interest margin increased to 3.82% for the fourth quarter of 2022, compared with 3.73% for the third quarter of 2022, and 3.32% for the fourth quarter of 2021.

The yield on earning assets increased to 4.89% in the fourth quarter of 2022, compared to 4.37% in the third quarter of 2022, and 3.71% in the fourth quarter of 2021. Quarter over quarter, average loans increased $13.6 million to $1.11 billion. Compared to the prior year fourth quarter, average loans increased $154.6 million, average investment securities decreased $11.1 million, and average lower yielding fed funds sold decreased $70.4 million.

The Federal Reserve increased the fed funds target by 425 basis points over its last seven meetings of 2022. Conversely, the Bank’s fed funds sold, floating rate investment securities, loans with variable rate pricing features, and new loan originations benefitted from the upward movement in short-term rates during 2022. The cost of interest-bearing liabilities were also impacted, although to a lesser extent.

Loan fee income can meaningfully impact net interest income, loan yields, and net interest margin. The amount of loan fee income included in total interest income was $245,000, $279,000, and $967,000 for the quarters ended December 31, 2022, September 30, 2022, and December 31, 2021, respectively. This represents seven basis points, eight basis points, and 29 basis points of yield on earning assets and net interest margin for the quarters ended December 31, 2022, September 30, 2022, and December 31, 2021, respectively. Loan fee income for the fourth and third quarters of 2022 did not include any fees earned on Paycheck Protection Program (PPP) loans, compared to $261,000 in the fourth quarter of 2021, which represented eight basis points of earning asset yield and net interest margin for the fourth quarter of 2021.

The following table reconciles the as reported yield on earning assets to the yield on earning assets excluding PPP fees, a non-GAAP financial measure:

	Three Months Ended
		12/31/22			9/30/22			6/30/22			3/31/22			12/31/21
	(in thousands)
Yield on Earning Assets, as reported		4.89	%		4.37	%		3.95	%		3.82	%		3.71	%
Less Impact of PPP Fees		—			—			—			0.02			0.08
Yield on Earning Asset excluding PPP Fees		4.89	%		4.37	%		3.95	%		3.80	%		3.63	%

The cost of interest-bearing liabilities was 1.44% for the fourth quarter of 2022, compared to 0.85% in the third quarter of 2022, and 0.53% in the fourth quarter of 2021. The movement in short-term rates impacted the cost of interest-bearing liabilities.

Net interest income increased to $49.1 million for the year ended December 31, 2022, compared with $44.2 million for the year ended December 31, 2021. Net interest margin increased to 3.62% in the year ended December 31, 2022, compared with 3.48% for the year ended December 31, 2021.

The yield on earning assets increased to 4.27% for the year ended December 31, 2022, compared to 3.92% for the year ended December 31, 2021. During the year ended December 31, 2022, average loans increased $113.8 million to $1.07 billion and average investment securities increased $20.2 million, while average lower yielding fed funds sold decreased $51.7 million compared to the year ended December 31, 2021. Average PPP loans were $294,000 and $15.5 million for the year ended December 31, 2022 and 2021, respectively. The amount of loan fee income included in total interest income was $1.0 million and $4.3 million for the year ended December 31, 2022 and 2021, respectively. This represented eight basis points and 33 basis points of yield on earning assets and net interest margin for the year ended December 31, 2022 and 2021, respectively. Loan fee income included PPP fees of $45,000 and $2.8 million for the year ended December 31, 2022 and 2021, respectively, which represented approximately one basis point and 21 basis points of earning asset yield and net interest margin, respectively.

The cost of interest-bearing liabilities was 0.86% for 2022, compared to 0.59% for 2021. The cost of interest-bearing liabilities was negatively impacted by the increases in short-term interest rates.

Time deposits increased $16.4 million during the fourth quarter of 2022. Approximately $57.1 million of time deposits with an average rate of 0.79% matured and were redeemed or repriced during the fourth quarter of 2022. During the fourth quarter of 2022, newly originated or renewed time deposits had an average rate of 3.05% and an average term of approximately 9 months. As of December 31, 2022, time deposits comprised $290.2 million of the Company’s liabilities including $69.3 million with a current average rate of 0.98%, which reprice or mature in the first quarter of 2023. The following table denotes contractual time deposit maturities and average rates as of December 31, 2022:

Maturity Quarter		As of December 31, 2022 (in thousands)				Weighted Average Rate
Q1-2023			69,314			0.98
Q2-2023			108,956			2.89
Q3-2023			38,056			1.64
Q4-2023			16,690			1.20
Thereafter			57,145			0.72
Total time deposits		$	290,161			1.74	%

Provision and Allowance for Loan Losses – The allowance for loan losses to total loans was 1.17% at December 31, 2022, compared to 1.16% at September 30, 2022, and 1.15% at December 31, 2021.

Net loan recoveries were $1.4 million for 2022, compared to net loan charge-offs of $2.1 million for 2021. During the third quarter of 2022, the Bank received a payoff of $2.0 million on a nonaccrual commercial real estate loan resulting in a recovery of $1.5 million. A provision for loan losses of $130,000 and $80,000, or $0.01 and $0.01 per common share after taxes, was recorded in the fourth quarter and the year ended December 31, 2022, respectively, compared to a provision for loan losses of $500,000 and $1.2 million, or $0.05 and $0.11 per common share after taxes, in the fourth quarter and the year ended December 31, 2021. The loan loss provision for the fourth quarter of 2022 was primarily attributable to net charge-offs for the period. The loan loss provision for the year ended December 31, 2022, was primarily attributable to growth trends within the portfolio, offset by a significant recovery recognized during the third quarter and its impact on the historical loss percentages. The 2021 loan loss provisions were attributable to growth trends within the portfolio and net loan charge-offs impacting historical loss percentages during the period.

Non-interest Income and Expense – Non-interest income for the fourth quarter of 2022 increased $171,000 to $2.2 million, compared with $2.0 million for the fourth quarter of 2021. The increase was primarily related to an increase in service charges on deposit accounts of $98,000 and an increase in bank card interchange fees of $88,000, both of which were due to an increase in transaction volumes as compared to the prior period.

Non-interest expense increased $879,000, or 11.0%, to $8.9 million for the fourth quarter of 2022, compared with $8.0 million for the fourth quarter of 2021. The increase was primarily due to merger expenses of $691,000, or $0.07 per share, related to the pending merger with Peoples Bancorp, Inc. as announced on October 24, 2022. Salaries and benefits expense also increased $246,000 from the fourth quarter of 2021 as a result of the inflationary impact on salary administration, increased health care utilization costs, and increased performance-based incentive compensation.

Non-interest income for the year ended December 31, 2022, increased $438,000 to $8.9 million, compared with $8.4 million for the year ended December 31, 2021. The increase was primarily due to an increase in services charges on deposit accounts of $519,000 and an increase in bank card interchange fees of $162,000, both of which were due to an increase in transaction volumes. Bank owned life insurance income increased $180,000 for the year ended December 31, 2022, due to additional policies being purchased in March 2022. Non-interest income for the twelve months ended December 31, 2022, also included a $163,000 gain on sale of premises held for sale from the first quarter of 2022, while the year ended December 31, 2021, included a $191,000 gain on sale of OREO from the second quarter of 2021, as well as a $465,000 gain on the call of a corporate bond from the third quarter of 2021.

Non-interest expense increased $1.8 million, or 5.6%, to $33.8 million for the year ended December 31, 2022, compared with $32.0 million for the year ended December 31, 2021. The increase was primarily due to an increase of $889,000 in salaries and benefits as discussed above, merger expenses of $691,000 as discussed above, and a $396,000 increase in other non-interest expense primarily related to losses associated with demand deposit charge-offs and fraudulent check and debit card activity during the period. These increases from the prior year were offset by a decrease in communications expense of $262,000 for 2022 as a result of changes in information technology infrastructure during the period.

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; 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, 2021 and Form 10-Q for the nine months ended September 30, 2022.

Additional Information

Unaudited supplemental financial information for the fourth quarter ending December 31, 2022, follows.

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
	Three				Three				Twelve					Twelve
	Months				Months				Months					Months
	Ended				Ended				Ended					Ended
	12/31/22				12/31/21				12/31/22					12/31/21
Income Statement Data
Interest income	$	17,140			$	12,314			$		57,810			$	49,915
Interest expense		3,768				1,307					8,732				5,693
Net interest income		13,372				11,007					49,078				44,222
Provision for loan losses		130				500					80				1,150
Net interest income after provision		13,242				10,507					48,998				43,072
Service charges on deposit accounts		703				605					2,775				2,256
Bank card interchange fees		1,127				1,039					4,278				4,116
Bank owned life insurance income		107				106					706				526
Gain on sale of OREO		—				—					—				191
Gain (loss) on sales and calls of securities, net		—				—					(3	)			460
Gain on sale of premises held for sale		—				—					163				—
Other		218				234					958				890
Non-interest income		2,155				1,984					8,877				8,439
Salaries & employee benefits		4,847				4,601					19,021				18,132
Occupancy and equipment		983				978					4,201				4,041
Deposit account related expense		557				566					2,249				2,158
Data processing expense		400				379					1,591				1,512
Professional fees		155				251					818				952
Marketing expense		141				166					605				727
FDIC insurance		90				90					360				405
Deposit tax		99				105					396				375
Communications expense		126				161					419				681
Insurance expense		102				91					420				415
Postage and delivery		153				145					622				605
Merger expenses		691				—					691				—
Other		518				450					2,364				1,968
Non-interest expense		8,862				7,983					33,757				31,971
Income before income taxes		6,535				4,508					24,118				19,540
Income tax expense		1,621				1,063					5,776				4,631
Net income	$	4,914			$	3,445			$		18,342			$	14,909
Weighted average shares – Basic		7,638,855				7,597,256				7,631,243					7,593,176
Weighted average shares – Diluted		7,638,855				7,597,256				7,631,243					7,593,176
Basic earnings per common share	$	0.64			$	0.45			$	2.40				$	1.96
Diluted earnings per common share	$	0.64			$	0.45			$	2.40				$	1.96
Cash dividends declared per common share	$	0.05			$	0.00			$	0.20				$	0.00
Performance Ratios
Return on average assets		1.33	%			0.97	%			1.28		%			1.09	%
Return on average equity		15.05				10.51				14.17					12.03
Yield on average earning assets (tax equivalent)		4.89				3.71				4.27					3.92
Cost of interest-bearing liabilities		1.44				0.53				0.86					0.59
Net interest margin (tax equivalent)		3.82				3.32				3.62					3.48
Efficiency ratio2		52.62				61.45				57.05					61.25
Non-interest expense to average assets		2.41				2.25				2.35					2.34

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
		12/31/22			9/30/22				6/30/22					3/31/22				12/31/21
Income Statement Data
Interest income	$	17,140			$	15,121			$	13,122			$	12,427			$	12,314
Interest expense		3,768				2,209				1,442				1,313				1,307
Net interest income		13,372				12,912				11,680				11,114				11,007
Provision (negative provision) for loan losses		130				(1,250	)			450				750				500
Net interest income after provision		13,242				14,162				11,230				10,364				10,507
Service charges on deposit accounts		703				748				690				634				605
Bank card interchange fees		1,127				1,061				1,087				1,003				1,039
Bank owned life insurance income		107				148				249				202				106
Gain (loss) on sales and calls of securities, net		—				—				(3	)			—				—
Gain on sale of premises held for sale		—				—				—				163				—
Other		218				271				233				236				234
Non-interest income		2,155				2,228				2,256				2,238				1,984
Salaries & employee benefits		4,847				4,959				4,651				4,564				4,601
Occupancy and equipment		983				1,134				1,055				1,029				978
Deposit account related expense		557				571				574				547				566
Data processing expense		400				402				403				386				379
Professional fees		155				206				236				221				251
Marketing expense		141				159				172				133				166
FDIC insurance		90				90				90				90				90
Deposit tax		99				99				99				99				105
Communications expense		126				108				121				64				161
Insurance expense		102				104				109				105				91
Postage and delivery		153				156				150				163				145
Merger expenses		691				—				—				—				—
Other		518				709				567				570				450
Non-interest expense		8,862				8,697				8,227				7,971				7,983
Income before income taxes		6,535				7,693				5,259				4,631				4,508
Income tax expense		1,621				1,880				1,223				1,052				1,063
Net income	$	4,914			$	5,813			$	4,036			$	3,579			$	3,445
Weighted average shares – Basic		7,638,855				7,639,492				7,631,883				7,614,382				7,597,256
Weighted average shares – Diluted		7,638,855				7,639,492				7,631,883				7,614,382				7,597,256
Basic earnings per common share	$	0.64			$	0.76			$	0.53			$	0.47			$	0.45
Diluted earnings per common share	$	0.64			$	0.76			$	0.53			$	0.47			$	0.45
Cash dividends declared per common share	$	0.05			$	0.05			$	0.05			$	0.05			$	0.00
Performance Ratios
Return on average assets		1.33	%			1.59	%			1.14	%			1.03	%			0.97	%
Return on average equity		15.05				17.83				12.66				11.07				10.51
Yield on average earning assets (tax equivalent)		4.89				4.37				3.95				3.82				3.71
Cost of interest-bearing liabilities		1.44				0.85				0.58				0.53				0.53
Net interest margin (tax equivalent)		3.82				3.73				3.51				3.42				3.32
Efficiency ratio2		52.62				57.44				59.02				59.70				61.45
Non-interest expense to average assets		2.41				2.38				2.33				2.30				2.25

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
	As of
	12/31/22				9/30/22				6/30/22				3/31/22				12/31/21
Assets
Loans	$	1,111,854			$	1,127,945			$	1,073,815			$	1,047,285			$	1,001,840
Allowance for loan losses		(13,030	)			(13,031	)			(12,550	)			(12,195	)			(11,531	)
Net loans		1,098,824				1,114,914				1,061,265				1,035,090				990,309
Securities held to maturity3		43,282				43,350				44,205				45,639				46,460
Securities available for sale3		180,173				181,292				193,022				204,071				214,213
Federal funds sold & interest-bearing deposits		37,476				50,940				18,244				22,040				67,110
Cash and due from financial institutions		7,159				6,430				7,742				10,009				10,493
Premises and equipment		22,103				22,503				22,747				23,043				21,575
Premises held for sale		—				—				—				—				310
Bank owned life insurance		31,132				31,032				30,888				30,643				23,946
FHLB Stock		5,176				5,176				5,116				5,116				5,116
Deferred taxes, net		21,283				23,002				23,343				22,648				21,583
Goodwill		6,252				6,252				6,252				6,252				6,252
Intangible assets		1,733				1,797				1,861				1,925				1,989
Accrued interest receivable and other assets		7,862				7,007				6,383				6,230				6,336
Total Assets	$	1,462,455			$	1,493,695			$	1,421,068			$	1,412,706			$	1,415,692
Liabilities and Equity
Certificates of deposit	$	290,161			$	273,780			$	256,141			$	260,064			$	266,011
Interest checking		314,082				286,867				269,240				274,054				287,208
Money market		179,035				215,450				209,183				216,845				217,943
Savings		148,552				154,545				163,573				166,135				163,423
Total interest-bearing deposits		931,830				930,642				898,137				917,098				934,585
Demand deposits		268,954				287,938				269,425				281,533				274,083
Total deposits		1,200,784				1,218,580				1,167,562				1,198,631				1,208,668
FHLB advances		70,000				90,000				70,000				30,000				20,000
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		11,813				10,744				10,888				9,855				10,065
Total liabilities		1,328,597				1,365,324				1,294,450				1,284,486				1,284,733
Total stockholders’ equity		133,858				128,371				126,618				128,220				130,959
Total Liabilities and Stockholders’ Equity	$	1,462,455			$	1,493,695			$	1,421,068			$	1,412,706			$	1,415,692
Ending shares outstanding		7,638,633				7,639,033				7,640,680				7,622,157				7,594,749
Book value per common share	$	17.52			$	16.80			$	16.57			$	16.82			$	17.24
Tangible book value per common share4		16.48				15.75				15.51				15.75				16.16

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
	As of
	12/31/22				9/30/22				6/30/22				3/31/22				12/31/21
Average Balance Sheet Data
Assets	$	1,461,199			$	1,451,647			$	1,417,087			$	1,407,030			$	1,405,219
Loans		1,110,078				1,096,478				1,053,057				1,028,546				955,516
Earning assets		1,395,860				1,378,771				1,339,555				1,326,234				1,322,821
Deposits		1,204,804				1,203,098				1,184,426				1,199,174				1,199,334
Long-term debt and advances		114,586				108,229				93,968				67,667				66,000
Interest bearing liabilities		1,037,991				1,029,131				1,000,367				996,710				982,132
Stockholders’ equity		129,560				129,346				127,827				131,097				129,998
Asset Quality Data
Nonaccrual loans	$	856			$	1,054			$	3,007			$	3,447			$	3,124
Troubled debt restructurings on accrual		133				146				150				333				340
Loan 90 days or more past due still on accrual		—				—				—				—				—
Total non-performing loans		989				1,200				3,157				3,780				3,464
Real estate acquired through foreclosures		—				—				—				—				—
Other repossessed assets		—				—				—				—				—
Total non-performing assets	$	989			$	1,200			$	3,157			$	3,780			$	3,464
Non-performing loans to total loans		0.09	%			0.11	%			0.29	%			0.36	%			0.35	%
Non-performing assets to total assets		0.07				0.08				0.22				0.27				0.24
Allowance for loan losses to non-performing loans		1,317.49				1,085.92				397.53				322.62				332.88
Allowance for loan losses to total loans		1.17	%			1.16	%			1.17	%			1.16	%			1.15	%
Loan Charge-off Data
Loans charged off	$	(158	)		$	(86	)		$	(367	)		$	(227	)		$	(2,246	)
Recoveries		27				1,817				272				141				304
Net (charge-offs) recoveries	$	(131	)		$	1,731			$	(95	)		$	(86	)		$	(1,942	)
Loans by Risk Category5
Pass	$	1,089,330			$	1,116,009			$	1,052,624			$	1,023,039			$	977,962
Watch		15,189				3,177				6,426				8,567				7,856
Special Mention		—				—				—				—				—
Substandard		7,335				8,759				14,765				15,679				16,022
Doubtful		—				—				—				—				—
Total	$	1,111,854			$	1,127,945			$	1,073,815			$	1,047,285			$	1,001,840
Loans by Past Due Status
Past due loans:
30 – 59 days	$	1,919			$	300			$	600			$	1,108			$	556
60 – 89 days		268				57				209				89				210
90 days or more		—				—				—				—				—
Nonaccrual loans		856				1,054				3,007				3,447				3,124
Total past due and nonaccrual loans	$	3,043			$	1,411			$	3,816			$	4,644			$	3,890

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
		As of
		12/31/22			9/30/22				6/30/22				3/31/22				12/31/21
Risk-based Capital Ratios - Company
Tier I leverage ratio		10.44	%			10.04	%			9.68	%			9.38	%			9.14		%
Common equity Tier I risk-based capital ratio		10.14				9.46				9.16				8.93				9.00
Tier I risk-based capital ratio		11.71				10.89				10.49				10.19				10.38
Total risk-based capital ratio		14.63				13.75				13.39				13.12				13.41
Risk-based Capital Ratios – Limestone Bank
Tier I leverage ratio		11.59	%			11.56	%			11.39	%			11.20	%			10.84		%
Common equity Tier I risk-based capital ratio		13.01				12.55				12.38				12.21				12.35
Tier I risk-based capital ratio		13.01				12.55				12.38				12.21				12.35
Total risk-based capital ratio		14.01				13.53				13.35				13.17				13.31
FTE employees, end of period		222				226				225				222				227

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 loan 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 loan losses, which can vary significantly between periods.

	Three Months Ended
	12/31/22			9/30/22			6/30/22			3/31/22			12/31/21
Pretax, Pre-Provision Income	(in thousands)
Income before income taxes	$	6,535		$	7,693		$	5,259		$	4,631		$	4,508
Provision for credit losses		130			(1,250	)		450			750			500
Pretax, pre-provision income		6,665			6,443			5,709			5,381			5,008

		Twelve Months Ended
	12/31/22			12/31/21
		(in thousands)
Pretax, Pre-Provision Income
Income before income taxes	$	24,118		$	19,540
Provision for credit losses		80			1,150
Pretax, pre-provision income		24,198			20,690

⁽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
	12/31/22			9/30/22			6/30/22			3/31/22			12/31/21
Efficiency Ratio	(in thousands)
Net interest income	$	13,372		$	12,912		$	11,680		$	11,114		$	11,007
Non-interest income		2,155			2,228			2,256			2,238			1,984
Less: Net gain (loss) on securities		—			—			(3	)		—			—
Revenue used for efficiency ratio		15,527			15,140			13,939			13,352			12,991
Non-interest expense		8,862			8,697			8,227			7,971			7,983
Less: Merger expenses		691			—			—			—			—
Expenses used for efficiency ratio		8,171			8,697			8,227			7,971			7,983
Efficiency ratio		52.62	%		57.44	%		59.02	%		59.70	%		61.45	%

		Twelve Months Ended
		12/31/22			12/31/21
		(in thousands)
Efficiency Ratio
Net interest income	$	49,078		$	44,222
Non-interest income		8,877			8,439
Less: Net gain (loss) on securities		(3	)		460
Revenue used for efficiency ratio		57,958			52,201
Non-interest expense		33,757			31,971
Less: Merger expenses		691			—
Expenses used for efficiency ratio		33,066			31,971
Efficiency ratio		57.05	%		61.25	%

⁽³⁾ Investment Securities – The following table sets forth the amortized cost and fair value of our securities portfolio at the dates indicated.

		December 31, 2022																September 30, 2022
		Amortized Cost				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		$	24,541			$	—			$	(2,784	)		$	21,757			$	24,810			$	—			$	(2,864	)		$	21,946
Agency mortgage-backed residential			80,283				9				(10,387	)			69,905				82,193				16				(11,777	)			70,432
Collateralized loan obligations			48,202				—				(2,161	)			46,041				48,209				—				(2,221	)			45,988
Corporate bonds			45,512				—				(3,042	)			42,470				45,493				9				(2,576	)			42,926
Total available for sale		$	198,538			$	9			$	(18,374	)		$	180,173			$	200,705			$	25			$	(19,438	)		$	181,292
		Amortized Cost				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		$	43,282			$	—			$	(8,386	)		$	34,896			$	43,350			$	—			$	(9,582	)		$	33,768
Total held to maturity		$	43,282			$	—			$	(8,386	)		$	34,896			$	43,350			$	—			$	(9,582	)		$	33,768

⁽⁴⁾ 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
	12/31/22			9/30/22			6/30/22			3/31/22			12/31/21
Tangible Book Value Per Share	(in thousands, except share and per share data)
Common stockholders’ equity	$	133,858		$	128,371		$	126,618		$	128,220		$	130,959
Less: Goodwill		6,252			6,252			6,252			6,252			6,252
Less: Intangible assets		1,733			1,797			1,861			1,925			1,989
Tangible common equity		125,873			120,322			118,505			120,043			122,718
Shares outstanding		7,638,633			7,639,033			7,640,680			7,622,157			7,594,749
Tangible book value per common share	$	16.48		$	15.75		$	15.51		$	15.75		$	16.16
Book value per common share		17.52			16.80			16.57			16.82			17.24

⁽⁵⁾ 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/20230118005143/en/

John T. Taylor

Chief Executive Officer

(502) 499-4800

Source: Limestone Bancorp, Inc.

FAQ

What were Limestone Bancorp's earnings for Q4 2022?

Limestone Bancorp reported a net income of $4.9 million, or $0.64 per share, for Q4 2022.

How much is the dividend declared by Limestone Bancorp?

Limestone Bancorp declared a quarterly cash dividend of $0.05 per common share.

What was the full-year net income for Limestone Bancorp in 2022?

The full-year net income for Limestone Bancorp in 2022 was $18.3 million, or $2.40 per share.

What merger expenses did Limestone Bancorp incur in Q4 2022?

Limestone Bancorp incurred $691,000 in merger expenses related to its pending merger with Peoples Bancorp.

How did net interest income change for Limestone Bancorp in Q4 2022?

Net interest income increased to $13.4 million in Q4 2022, compared to $11.0 million in Q4 2021.