Limestone Bancorp, Inc. (NASDAQ: LMST) (the “Company”), parent
company of Limestone Bank, Inc. (the “Bank”), today reported
unaudited results for the first quarter of 2022. Net income
available to common shareholders for the first quarter of 2022 was
$3.6 million, or $0.47 per basic and diluted common share, compared
with $3.2 million, or $0.43 per basic and diluted common share, for
the first quarter of 2021.
John T. Taylor, Chief Executive Officer, stated, “We continue to
be pleased with the Company’s strong financial performance. We were
able to build on our loan growth momentum from last year and
achieve loan growth of 4.5% for the first quarter. Additionally,
given the Company’s solid capital position and earnings levels, we
instituted a quarterly common share dividend on April 1, 2022, as a
return of profits to our shareholders. I continue to be excited
about the future of our franchise.”
Total assets were $1.41 billion at March 31, 2022. The loan
portfolio increased $45.4 million, or 4.5%, during the first
quarter to $1.05 billion at March 31, 2022. Lower earning fed funds
sold were reduced by $45.6 million during the quarter.
Net Interest Income and Average Earning Assets – Net
interest income was $11.1 million for the first quarter of 2022,
compared to $11.0 million for the fourth quarter of 2021, and $10.7
million for the first quarter of 2021. Net interest margin
increased to 3.42% for the first quarter of 2022, compared with
3.32% for the fourth quarter of 2021, and decreased from 3.53% for
the first quarter of 2021.
The yield on earning assets increased to 3.82% in the first
quarter of 2022, compared to 3.71% in the fourth quarter of 2021,
and decreased from 4.05% in the first quarter of 2021. Quarter over
quarter, average loans increased $73.0 million to $1.03 billion,
while lower yielding fed funds sold decreased $73.8 million. PPP
loans averaged $605,000 and $3.5 million for the first quarter of
2022 and the fourth quarter of 2021, respectively. Compared to the
prior year first quarter, average loans increased $64.2 million and
investment securities increased $54.3 million, while lower yielding
fed funds sold decreased $22.1 million. PPP loans averaged $21.1
million for the first quarter of 2021.
While the Federal Reserve recently increased the federal funds
target rate by 25 basis points on March 16, 2022, the yield on
earning assets for the first quarter of 2022 and for the 2021
fiscal year were negatively impacted by the low interest rate
environment on the Bank’s fed funds sold, certain floating rate
investment securities, loans with variable rate pricing features,
and new loan originations, including PPP loans which carry a rate
of 1.0%. The negative impact of low rates was offset by an increase
in loan fee income discussed below.
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 $324,000, $967,000, and
$844,000 for the quarters ended March 31, 2022, December 31, 2021,
and March 31, 2021, respectively. This represents 10 basis points,
29 basis points, and 28 basis points of yield on earning assets and
net interest margin for the quarters ended March 31, 2022, December
31, 2021, and March 31, 2021, respectively. Loan fee income for the
first quarter of 2022 included $45,000 in fees earned on PPP loans,
compared to $261,000 in the fourth quarter of 2021, and $436,000 in
the first quarter of 2021, which represents two basis points, eight
basis points, and 14 basis points of earning asset yield and net
interest margin for those quarters, respectively. At March 31,
2022, PPP loans totaled $180,000 with no significant unearned PPP
origination fees remaining.
The cost of interest-bearing liabilities was unchanged at 0.53%
for the first quarter of 2022, compared to the fourth quarter of
2021, and decreased from 0.68% in the first quarter of 2021. The
cost of interest-bearing liabilities continued to benefit as a
result of continued improvement in deposit mix, as well as the
downward repricing of time deposits between periods. Time deposits
declined $5.9 million during the first quarter of 2022 as
approximately $55.0 million of time deposits with an average rate
of 0.33% matured and redeemed or repriced at lower interest rates.
During the first quarter of 2022, newly originated or renewed time
deposits had an average rate of 0.26% and an average term of
approximately 16 months.
As of March 31, 2022, time deposits comprised $260.1 million of
the Company’s liabilities including $59.4 million with a current
average rate of 0.29%, which reprice or mature in the second
quarter of 2022. The following table denotes contractual time
deposit maturities and average rates as of March 31, 2022:
Maturity
Quarter
As of
March 31,
2022
(in thousands)
Weighted Average Rate
Q2-2022
59,393
0.29
Q3-2022
38,562
0.34
Q4-2022
31,670
0.32
Q1-2023
38,631
0.44
Thereafter
91,808
0.86
Total time deposits
$
260,064
0.52
%
Provision and Allowance for Loan Losses – The allowance
for loan losses to total loans was 1.16% at March 31, 2022,
compared to 1.15% at December 31, 2021, and 1.30% at March 31,
2021.
Net loan charge-offs were $86,000 for the first quarter of 2022,
compared to net loan charge-offs of $1.9 million for the fourth
quarter of 2021, and net loan charge-offs of $38,000 for the first
quarter of 2021. A provision for loan loss of $750,000, or $0.07
per common share after taxes, was recorded in the first quarter of
2022, compared to $500,000, or $0.05 per common share after taxes,
in the fourth quarter of 2021, and compared to $350,000, or $0.04
per common share after taxes, in the first quarter of 2021. The
2022 and 2021 loan loss provisions were attributable to net loan
charge-offs impacting historical loss percentages and growth trends
within the portfolio during the quarters.
Non-interest Income and Expense – Non-interest income for
the first quarter of 2022 increased $461,000 to $2.2 million,
compared with $1.8 million for the fourth quarter of 2021, and
$354,000 compared with $1.9 million for the first quarter of 2021.
The increase for the first quarter of 2022 was primarily related to
a $163,000 gain on the sale of premises held for sale. Non-interest
expense was $8.0 million for the first quarter of 2022, the fourth
quarter of 2021, and the first quarter of 2021. Salaries and
benefits represent our most significant non-interest expense.
Salaries and benefits expense decreased $37,000 from the fourth
quarter of 2021 and increased $82,000 from the first quarter of
2021. These fluctuations are generally driven by changes in FTEs
during each period. Given current market conditions, we expect
inflationary pressure to impact salaries and benefits in the range
of four to five percent in 2022 as we compete for talent and
administer our wage and benefit programs.
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 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.
Additional Information
Unaudited supplemental financial information for the first
quarter ending March 31, 2022, follows.
LIMESTONE BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share
data)
Three Months Ended
3/31/22
3/31/21
Income Statement Data
Interest income
$
12,427
$
12,250
Interest expense
1,313
1,570
Net interest income
11,114
10,680
Provision for loan losses
750
350
Net interest income after provision
10,364
10,330
Service charges on deposit accounts
634
548
Bank card interchange fees
1,003
960
Bank owned life insurance income
202
165
Gain on sale of premises held for sale
163
—
Other
236
211
Non-interest income
2,238
1,884
Salaries & employee benefits
4,564
4,482
Occupancy and equipment
1,029
1,060
Professional fees
221
236
Marketing expense
133
182
FDIC insurance
90
135
Data processing expense
386
378
Deposit tax
99
90
Deposit account related expense
547
491
Communications expense
64
173
Insurance expense
105
104
Postage and delivery
163
152
Other
570
501
Non-interest expense
7,971
7,984
Income before income taxes
4,631
4,230
Income tax expense
1,052
1,008
Net income
3,579
3,222
Weighted average shares – Basic
7,614,382
7,575,211
Weighted average shares – Diluted
7,614,382
7,575,211
Basic earnings per common share
$
0.47
$
0.43
Diluted earnings per common share
$
0.47
$
0.43
Cash dividends declared per common
share
$
0.05
$
0.00
Performance Ratios
Return on average assets
1.03
%
0.99
%
Return on average equity
11.07
11.11
Yield on average earning assets (tax
equivalent)
3.82
4.05
Cost of interest-bearing liabilities
0.53
0.68
Net interest margin (tax equivalent)
3.42
3.53
Efficiency ratio1
59.70
63.55
Non-interest expense to average assets
2.30
2.46
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
3/31/22
12/31/21
9/30/21
6/30/21
3/31/21
Income Statement Data
Interest income
$
12,427
$
12,314
$
12,975
$
12,376
$
12,250
Interest expense
1,313
1,307
1,354
1,462
1,570
Net interest income
11,114
11,007
11,621
10,914
10,680
Provision for loan losses
750
500
300
—
350
Net interest income after provision
10,364
10,507
11,321
10,914
10,330
Service charges on deposit accounts
634
605
583
520
548
Bank card interchange fees
1,003
1,039
1,044
1,073
960
Bank owned life insurance income
202
106
112
143
165
Gain on sale of OREO
—
—
—
191
—
Gain (loss) on sales and calls of
securities, net
—
—
465
(5
)
—
Gain on sale of premises held for sale
163
—
—
—
—
Other
236
234
232
213
211
Non-interest income
2,238
1,984
2,436
2,135
1,884
Salaries & employee benefits
4,564
4,601
4,582
4,467
4,482
Occupancy and equipment
1,029
978
1,024
979
1,060
Professional fees
221
251
219
246
236
Marketing expense
133
166
200
179
182
FDIC insurance
90
90
90
90
135
Data processing expense
386
379
378
377
378
Deposit tax
99
105
90
90
90
Deposit account related expense
547
566
545
556
491
Communications expense
64
161
153
194
173
Insurance expense
105
91
105
115
104
Postage and delivery
163
145
169
139
152
Other
570
450
495
522
501
Non-interest expense
7,971
7,983
8,050
7,954
7,984
Income before income taxes
4,631
4,508
5,707
5,095
4,230
Income tax expense
1,052
1,063
1,366
1,194
1,008
Net income
$
3,579
$
3,445
$
4,341
$
3,901
$
3,222
Weighted average shares – Basic
7,614,382
7,597,256
7,602,686
7,597,202
7,575,211
Weighted average shares – Diluted
7,614,382
7,597,256
7,602,686
7,597,202
7,575,211
Basic earnings per common share
$
0.47
$
0.45
$
0.57
$
0.51
$
0.43
Diluted earnings per common share
$
0.47
$
0.45
$
0.57
$
0.51
$
0.43
Cash dividends declared per common
share
$
0.05
$
0.00
$
0.00
$
0.00
$
0.00
Performance Ratios
Return on average assets
1.03
%
0.97
%
1.26
%
1.15
%
0.99
%
Return on average equity
11.07
10.51
13.61
12.89
11.11
Yield on average earning assets (tax
equivalent)
3.82
3.71
4.03
3.91
4.05
Cost of interest-bearing liabilities
0.53
0.53
0.56
0.61
0.68
Net interest margin (tax equivalent)
3.42
3.32
3.61
3.45
3.53
Efficiency ratio1
59.70
61.45
59.23
60.93
63.55
Non-interest expense to average assets
2.30
2.25
2.33
2.34
2.46
LIMESTONE BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share
data)
As of
3/31/22
12/31/21
9/30/21
6/30/21
3/31/21
Assets
Loans
$
1,047,285
$
1,001,840
$
968,088
$
947,425
$
978,865
Allowance for loan losses
(12,195
)
(11,531
)
(12,973
)
(12,637
)
(12,755
)
Net loans
1,035,090
990,309
955,115
934,788
966,110
Securities held to maturity2
45,639
46,460
47,539
46,717
41,254
Securities available for sale2
204,071
214,213
203,548
182,154
177,690
Federal funds sold & interest-bearing
deposits
22,040
67,110
44,909
75,536
74,047
Cash and due from financial
institutions
10,009
10,493
13,579
9,584
9,800
Premises and equipment
23,043
21,575
21,623
21,912
20,405
Premises held for sale
—
310
980
980
1,035
Bank owned life insurance
30,643
23,946
23,845
23,738
23,601
FHLB Stock
5,116
5,116
5,116
5,449
5,810
Other real estate owned
—
—
—
—
1,765
Deferred taxes, net
22,648
21,583
22,161
23,452
24,992
Goodwill
6,252
6,252
6,252
6,252
6,252
Intangible assets
1,925
1,989
2,053
2,117
2,181
Accrued interest receivable and other
assets
6,230
6,336
6,128
6,231
6,769
Total Assets
$
1,412,706
$
1,415,692
$
1,352,848
$
1,338,910
$
1,361,711
Liabilities and Equity
Certificates of deposit
$
260,064
$
266,011
$
280,545
$
303,668
$
355,309
Interest checking
274,054
287,208
239,923
216,344
211,322
Money market
216,845
217,943
198,470
191,773
180,137
Savings
166,135
163,423
163,018
160,257
151,340
Total interest-bearing deposits
917,098
934,585
881,956
872,042
898,108
Demand deposits
281,533
274,083
266,035
267,059
268,882
Total deposits
1,198,631
1,208,668
1,147,991
1,139,101
1,166,990
FHLB advances
30,000
20,000
20,000
20,000
20,613
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
9,855
10,065
10,193
9,850
8,588
Total liabilities
1,284,486
1,284,733
1,224,184
1,214,951
1,242,191
Total stockholders’ equity
128,220
130,959
128,664
123,959
119,520
Total Liabilities and Stockholders’
Equity
$
1,412,706
$
1,415,692
$
1,352,848
$
1,338,910
$
1,361,711
Ending shares outstanding
7,622,157
7,594,749
7,602,686
7,602,686
7,594,499
Book value per common share
$
16.82
$
17.24
$
16.92
$
16.30
$
15.74
Tangible book value per common
share3
15.75
16.16
15.83
15.20
14.63
LIMESTONE BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share
data)
As of
3/31/22
12/31/21
9/30/21
6/30/21
3/31/21
Average Balance Sheet Data
Assets
$
1,407,030
$
1,405,219
$
1,369,372
$
1,361,080
$
1,316,878
Loans
1,028,546
955,516
952,567
961,922
964,353
Earning assets
1,326,234
1,322,821
1,284,188
1,275,363
1,230,610
Deposits
1,199,174
1,199,334
1,166,785
1,164,524
1,125,943
Long-term debt and advances
67,667
66,000
66,000
66,000
66,617
Interest bearing liabilities
996,710
982,132
954,007
956,172
941,342
Stockholders’ equity
131,097
129,998
126,556
121,386
117,663
Asset Quality Data
Nonaccrual loans
$
3,447
$
3,124
$
1,627
$
1,530
$
1,996
Troubled debt restructurings on
accrual
333
340
561
390
399
Loan 90 days or more past due still on
accrual
—
—
—
—
—
Total non-performing loans
3,780
3,464
2,188
1,920
2,395
Real estate acquired through
foreclosures
—
—
—
—
1,765
Other repossessed assets
—
—
—
—
—
Total non-performing assets
$
3,780
$
3,464
$
2,188
$
1,920
$
4,160
Non-performing loans to total loans
0.36
%
0.35
%
0.23
%
0.20
%
0.24
%
Non-performing assets to total assets
0.27
0.24
0.16
0.14
0.31
Allowance for loan losses to
non-performing loans
322.62
332.88
592.92
658.18
532.57
Allowance for loan losses to total
loans
1.16
%
1.15
%
1.34
%
1.33
%
1.30
%
Loan Charge-off Data
Loans charged off
$
(227
)
$
(2,246
)
$
(25
)
$
(178
)
$
(77
)
Recoveries
141
304
61
60
39
Net (charge-offs) recoveries
$
(86
)
$
(1,942
)
$
36
$
(118
)
$
(38
)
Loans by Risk Category4
Pass
$
1,023,039
$
977,962
$
945,396
$
913,753
$
942,492
Watch
8,567
7,856
3,407
15,888
17,929
Special Mention
—
—
—
—
—
Substandard
15,679
16,022
19,285
17,784
18,444
Doubtful
—
—
—
—
—
Total
$
1,047,285
$
1,001,840
$
968,088
$
947,425
$
978,865
Loans by Past Due Status
Past due loans:
30 – 59 days
$
1,108
$
556
$
630
$
181
$
677
60 – 89 days
89
210
142
252
254
90 days or more
—
—
—
—
—
Nonaccrual loans
3,447
3,124
1,627
1,530
1,996
Total past due and nonaccrual
loans
$
4,644
$
3,890
$
2,399
$
1,963
$
2,927
LIMESTONE BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share
data)
As of
3/31/22
12/31/21
9/30/21
6/30/21
3/31/21
Risk-based Capital Ratios -
Company
Tier I leverage ratio
9.38
%
9.14
%
9.39
%
8.70
%
8.59
%
Common equity Tier I risk-based capital
ratio
8.93
9.00
9.37
9.48
8.96
Tier I risk-based capital ratio
10.19
10.38
10.86
10.63
10.00
Total risk-based capital ratio
13.12
13.41
14.13
14.09
13.42
Risk-based Capital Ratios – Limestone
Bank
Tier I leverage ratio
11.20
%
10.84
%
10.96
%
10.55
%
10.44
%
Common equity Tier I risk-based capital
ratio
12.21
12.35
12.68
12.95
12.21
Tier I risk-based capital ratio
12.21
12.35
12.68
12.95
12.21
Total risk-based capital ratio
13.17
13.31
13.80
14.11
13.37
FTE employees, end of period
222
227
232
231
225
Footnotes:
(1) 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
3/31/22
12/31/21
9/30/21
6/30/21
3/31/21
Efficiency Ratio
(in thousands)
Net interest income
$
11,114
$
11,007
$
11,621
$
10,914
$
10,680
Non-interest income
2,238
1,984
2,436
2,135
1,884
Less: Net gain (loss) on securities
—
—
465
(5
)
—
Revenue used for efficiency ratio
13,352
12,991
13,592
13,054
12,564
Non-interest expense
7,971
7,983
8,050
7,954
7,984
Efficiency ratio
59.70
%
61.45
%
59.23
%
60.93
%
63.55
%
(2) Investment Securities – The following table sets forth the
amortized cost and fair value of our securities portfolio at the
dates indicated.
March 31, 2022
December 31, 2021
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
$
26,952
$
—
$
(1,196
)
$
25,756
$
26,075
$
301
$
(133
)
$
26,243
Agency mortgage-backed residential
90,589
177
(5,097
)
85,669
93,650
1,339
(970
)
94,019
Collateralized loan obligations
48,221
—
(297
)
47,924
50,227
—
(78
)
50,149
Corporate bonds
45,453
221
(952
)
44,722
43,432
572
(202
)
43,802
Total available for sale
$
211,215
$
398
$
(7,542
)
$
204,071
$
213,384
$
2,212
$
(1,383
)
$
214,213
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
$
45,639
$
24
$
(4,873
)
$
40,790
$
46,460
$
158
$
(338
)
$
46,280
Total held to maturity
$
45,639
$
24
$
(4,873
)
$
40,790
$
46,460
$
158
$
(338
)
$
46,280
(3) 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
3/31/22
12/31/21
9/30/21
6/30/21
3/31/21
Tangible Book Value Per Share
(in thousands, except share and
per share data)
Common stockholders’ equity
$
128,220
$
130,959
$
128,664
$
123,959
$
119,520
Less: Goodwill
6,252
6,252
6,252
6,252
6,252
Less: Intangible assets
1,925
1,989
2,053
2,117
2,181
Tangible common equity
120,043
122,718
120,359
115,590
111,087
Shares outstanding
7,622,157
7,594,749
7,602,686
7,602,686
7,594,499
Tangible book value per common share
$
15.75
$
16.16
$
15.83
$
15.20
$
14.63
Book value per common share
16.82
17.24
16.92
16.30
15.74
(4) 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/20220420005128/en/
John T. Taylor Chief Executive Officer (502) 499-4800
Grafico Azioni Limestone Bancorp (NASDAQ:LMST)
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