Limestone Bancorp (LMST) 8-K Limestone Bancorp Reports Net Income of $2.8 million, or $0.38 per Share for the 1st Quarter of 2019

Exhibit 99.1

Limestone Bancorp Reports Net Income of $2.8 million, or $0.38 per Share for the 1^st Quarter of 2019

LOUISVILLE, Ky.--(BUSINESS WIRE)--April 24, 2019--Limestone Bancorp, Inc. (NASDAQ: LMST) (“the Company”), parent company of Limestone Bank (“the Bank”), today reported unaudited results for the first quarter of 2019. Net income for the first quarter of 2019 was $2.8 million, or $0.38 per basic and diluted common share, compared to net income of $1.9 million, or $0.31 per basic and diluted share, for the first quarter of 2018.

Net income before taxes and income tax expense was $3.0 million and $123,000, respectively for the first quarter of 2019, compared with $2.3 million and $329,000, respectively for the first quarter of 2018. Income tax expense for the first quarter of 2019 benefitted $341,000, or $0.05 per basic and diluted common share, from the establishment of a net deferred tax asset related to a change in Kentucky tax law enacted during the first quarter of 2019. The new law eliminates the Kentucky bank franchise tax, which is assessed at a rate of 1.1% of average capital, and implements a state income tax for the Bank at a statutory rate of 5%. The new Kentucky income tax will go into effect on January 1, 2021.

Net Interest Income – Net interest income was $9.0 million for the first quarter of 2019, compared to $8.7 million for the fourth quarter of 2018, and $8.2 million for the first quarter of 2018. Average loans increased to $766.5 million for the first quarter of 2019, compared to $765.5 million for the fourth quarter of 2018, and $724.2 million for the first quarter of 2018. Net interest margin was 3.61% for the first quarter of 2019, 3.46% for the fourth quarter of 2018, and 3.63% for the first quarter of 2018.

The yield on earning assets increased to 4.90% in the first quarter of 2019, compared to 4.66% in the fourth quarter of 2018, and 4.45% in the first quarter of 2018. 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 $546,000, $166,000, and $97,000 for the quarters ended March 31, 2019, December 31, 2018, and March 31, 2018, respectively. This represents 22 basis points, six basis points, and five basis points of yield on earning assets and net interest margin for the quarters ended March 31, 2019, December 31, 2018, and March 31, 2018, respectively. The cost of interest bearing liabilities was 1.57% for the first quarter of 2019, compared to 1.46% in the fourth quarter of 2018, and 0.96% in the first quarter of 2018.

Provision and Allowance for Loan Losses – The allowance for loan losses to total loans was 1.10% at March 31, 2019, compared to 1.16% at December 31, 2018, and 1.17% at March 31, 2018. Net loan charge-offs were $194,000 for the first quarter of 2019, compared to net loan recoveries of $324,000 for the first quarter of 2018. Based upon historically strong trends in asset quality and management’s assessment of risk in the loan portfolio, no provision for loan losses was recorded in the first quarter of 2019 or 2018.

Non-performing Assets – Non-performing assets, which include loans on nonaccrual, accruing troubled debt restructurings, loans past due 90 days and still accruing, and other real estate owned (“OREO”), decreased to $6.2 million, or 0.57% of total assets at March 31, 2019, compared with $6.4 million, or 0.60% of total assets at December 31, 2018, and $9.7 million, or 0.97% of total assets at March 31, 2018. Non-performing loans decreased to $2.8 million, or 0.36% of total loans at March 31, 2019, compared with $2.9 million, or 0.38% of total loans at December 31, 2018, and from $5.3 million, or 0.73% of total loans at March 31, 2018.

OREO at March 31, 2019, decreased to $3.3 million, compared with $3.5 million at December 31, 2018, and $4.4 million at March 31, 2018. Fair value write-downs arising from changing marketing strategies totaled $150,000 for the first quarter of 2019, compared to $60,000 for the first quarter of 2018.

Non-interest Income and Expense – Non-interest income was $1.3 million for the first quarter of 2019 and the first quarter of 2018. Non-interest expense increased $112,000, or 1.6% to $7.3 million for the first quarter of 2019, compared with $7.2 million for the first quarter of 2018. The increase from the first quarter of 2019 was primarily due to an increase in salaries and employee benefits of $127,000.

Capital – At March 31, 2019, the Bank’s Tier 1 leverage ratio was 9.88%, compared with 9.60% at December 31, 2018, and its Total risk-based capital ratio was 13.01% at March 31, 2019, compared with 12.88% at December 31, 2018. At March 31, 2019, the Company’s Tier 1 leverage ratio was 9.30%, compared with 9.00% at December 31, 2018, and its Total risk-based capital ratio was 12.32%, compared with 12.23% at December 31, 2018. At March 31, 2019, the Company’s Common equity Tier 1 risk-based capital ratio was 9.57%, compared with 9.44% at December 31, 2018.

About Limestone Bancorp, Inc.

Limestone Bancorp, Inc. (NASDAQ: LMST) is a Louisville, Kentucky-based bank holding company which operates banking centers in 12 counties through its wholly-owned subsidiary Limestone Bank. The Bank’s markets include metropolitan Louisville in Jefferson County and the surrounding counties of Henry and Bullitt, and extend south along the Interstate 65 corridor. The Bank serves southern and south central Kentucky from banking centers in Butler, Green, Hart, Edmonson, Barren, Warren, Ohio and Daviess counties. The Bank also has 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 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: 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, 2018.

Additional Information

Unaudited supplemental financial information for the first quarter ending March 31, 2019, follows.

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
	Three Months Ended
	3/31/19		3/31/18
Income Statement Data
Interest income	$	12,186	$	10,015
Interest expense		3,227		1,834
Net interest income		8,959		8,181
Provision (negative provision) for loan losses		—		—
Net interest income after provision		8,959		8,181
Service charges on deposit accounts		496		568
Bank card interchange fees		508		401
Bank owned life insurance income		99		99
Gain (loss) on sales and calls of securities, net		—		—
Other		181		183
Non-interest income		1,284		1,251
Salaries & employee benefits		3,915		3,788
Occupancy and equipment		898		895
Professional fees		165		205
Marketing expense		227		300
FDIC insurance		108		182
Data processing expense		313		324
State franchise and deposit tax		315		282
Deposit account related expense		281		219
Other real estate owned expense		166		82
Litigation and loan collection expense		46		53
Other		847		839
Non-interest expense		7,281		7,169
Income before income taxes		2,962		2,263
Income tax expense		123		329
Net income		2,839		1,934
Weighted average shares – Basic		7,469,912		6,285,420
Weighted average shares – Diluted		7,469,912		6,285,420
Basic earnings per common share	$	0.38	$	0.31
Diluted earnings per common share	$	0.38	$	0.31
Cash dividends declared per common share	$	0.00	$	0.00

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
	3/31/19		12/31/18		9/30/18			6/30/18			3/31/18
Income Statement Data
Interest income	$	12,186	$	11,741	$	11,120		$	10,585		$	10,015
Interest expense		3,227		3,037		2,708			2,211			1,834
Net interest income		8,959		8,704		8,412			8,374			8,181
Provision (negative provision) for loan losses		—		—		(350	)		(150	)		—
Net interest income after provision		8,959		8,704		8,762			8,524			8,181
Service charges on deposit accounts		496		588		608			591			568
Bank card interchange fees		508		573		411			446			401
Bank owned life insurance income		99		100		100			138			99
Gain (loss) on sales and calls of securities, net		—		—		—			(6	)		—
Other		181		411		390			178			183
Non-interest income		1,284		1,672		1,509			1,347			1,251
Salaries & employee benefits		3,915		3,923		3,893			3,885			3,788
Occupancy and equipment		898		915		896			880			895
Professional fees		165		201		186			222			205
Marketing expense		227		247		259			308			300
FDIC insurance		108		118		118			139			182
Data processing expense		313		280		281			307			324
State franchise and deposit tax		315		272		282			282			282
Deposit account related expense		281		170		213			221			219
Other real estate owned expense		166		278		271			237			82
Litigation and loan collection expense		46		83		61			48			53
Other		847		835		770			876			839
Non-interest expense		7,281		7,322		7,230			7,405			7,169
Income before income taxes		2,962		3,054		3,041			2,466			2,263
Income tax expense		123		614		604			483			329
Net income	$	2,839	$	2,440	$	2,437		$	1,983		$	1,934
Weighted average shares – Basic		7,469,912		7,457,206		7,455,316			7,424,742			6,285,420
Weighted average shares – Diluted		7,469,912		7,457,206		7,455,316			7,424,742			6,285,420
Basic earnings per common share	$	0.38	$	0.33	$	0.33		$	0.27		$	0.31
Diluted earnings per common share	$	0.38	$	0.33	$	0.33		$	0.27		$	0.31
Cash dividends declared per common share	$	0.00	$	0.00	$	0.00		$	0.00		$	0.00

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
	As of
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18
Assets
Loans	$	786,585		$	765,244		$	757,051		$	749,234		$	729,432
Allowance for loan losses		(8,686	)		(8,880	)		(8,634	)		(8,580	)		(8,526	)
Net loans		777,899			756,364			748,417			740,654			720,906
Securities available for sale		206,411			201,192			184,870			178,896			160,812
Federal funds sold & interest bearing deposits		24,029			28,398			31,761			33,534			30,073
Cash and due from financial institutions		6,461			6,963			5,770			7,013			7,610
Premises and equipment		14,926			14,655			17,027			16,813			16,789
Premises held for sale		1,050			1,050			—			—			—
Bank owned life insurance		15,739			15,646			15,551			15,456			15,323
FHLB Stock		6,813			7,233			7,233			7,323			7,323
Other real estate owned		3,335			3,485			3,750			4,510			4,385
Deferred taxes, net		28,568			29,282			30,230			30,623			30,997
Accrued interest receivable and other assets		6,092			5,424			5,882			5,699			5,886
Total Assets	$	1,091,323		$	1,069,692		$	1,050,491		$	1,040,521		$	1,000,104
Liabilities and Equity
Certificates of deposit	$	465,369		$	450,886		$	457,239		$	435,454		$	431,921
Interest checking		96,537			94,269			87,407			88,955			92,048
Money market		166,430			171,924			159,499			150,048			150,974
Savings		34,066			34,534			34,320			35,220			35,984
Total interest bearing deposits		762,402			751,613			738,465			709,677			710,927
Demand deposits		146,440			142,618			135,561			136,553			135,984
Total deposits		908,842			894,231			874,026			846,230			846,911
FHLB advances		51,511			46,549			51,591			71,630			26,752
Junior subordinated debentures		21,000			21,000			21,000			21,000			23,025
Senior debt		10,000			10,000			10,000			10,000			10,000
Accrued interest payable and other liabilities		3,651			5,815			5,662			5,262			5,186
Total liabilities		995,004			977,595			962,279			954,122			911,874
Preferred stockholders’ equity		—			—			—			—			2,771
Common stockholders’ equity		96,319			92,097			88,212			86,399			85,459
Total stockholders’ equity		96,319			92,097			88,212			86,399			88,230
Total Liabilities and Stockholders’ Equity	$	1,091,323		$	1,069,692		$	1,050,491		$	1,040,521		$	1,000,104
Ending shares outstanding		7,460,614			7,462,720			7,456,590			7,454,993			7,409,864
Book value per common share	$	12.91		$	12.34		$	11.83		$	11.59		$	11.53
Tangible book value per common share		12.91			12.34			11.83			11.59			11.53

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
	As of
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18
Average Balance Sheet Data
Assets	$	1,075,553		$	1,066,216		$	1,037,636		$	1,013,008		$	987,390
Loans		766,505			765,542			748,444			734,709			724,203
Earning assets		1,009,948			1,001,093			968,876			943,023			915,762
Deposits		900,829			895,377			869,707			842,757			834,695
Long-term debt and advances		76,524			75,339			74,994			76,209			74,063
Interest bearing liabilities		834,637			824,300			810,917			783,123			777,140
Stockholders’ equity		93,491			89,836			87,486			88,701			73,205
Quarterly Performance Ratios
Return on average assets		1.07	%		0.91	%		0.93	%		0.79	%		0.79	%
Return on average equity		12.32			10.78			11.05			8.97			10.71
Yield on average earning assets (tax equivalent)		4.90			4.66			4.56			4.51			4.45
Cost of interest bearing liabilities		1.57			1.46			1.32			1.13			0.96
Net interest margin (tax equivalent)		3.61			3.46			3.45			3.57			3.63
Efficiency ratio		71.08			70.57			72.88			76.13			76.01
Asset Quality Data
Nonaccrual loans	$	1,921		$	1,991		$	2,692		$	3,170		$	4,370
Troubled debt restructurings on accrual		910			910			910			916			922
Loan 90 days or more past due still on accrual		—			—			—			—			—
Total non-performing loans		2,831			2,901			3,602			4,086			5,292
Real estate acquired through foreclosures		3,335			3,485			3,750			4,510			4,385
Other repossessed assets		—			—			—			—			—
Total non-performing assets	$	6,166		$	6,386		$	7,352		$	8,596		$	9,677
Non-performing loans to total loans		0.36	%		0.38	%		0.48	%		0.55	%		0.73	%
Non-performing assets to total assets		0.57			0.60			0.70			0.83			0.97
Allowance for loan losses to non-performing loans		306.82			306.10			239.70			209.99			161.11
Allowance for loan losses to total loans		1.10	%		1.16	%		1.14	%		1.15	%		1.17	%
Loan Charge-off Data
Loans charged off	$	(278	)	$	(133	)	$	(143	)	$	(293	)	$	(47	)
Recoveries		84			379			547			497			371
Net recoveries (charge-offs)	$	(194	)	$	246		$	404		$	204		$	324
Loans by Risk Category
Pass	$	756,493		$	745,604		$	736,193		$	720,446		$	695,507
Watch		17,412			13,164			12,314			19,091			17,938
Special Mention		—			113			114			115			162
Substandard		12,680			6,363			8,430			9,582			15,825
Doubtful		—			—			—			—			—
Total	$	786,585		$	765,244		$	757,051		$	749,234		$	729,432
Loans by Past Due Status
Past due loans:
30 – 59 days	$	2,001		$	1,593		$	1,492		$	1,134		$	6,402
60 – 89 days		240			331			929			538			472
90 days or more		—			—			—			—			—
Nonaccrual loans		1,921			1,991			2,692			3,170			4,370
Total past due and nonaccrual loans	$	4,162		$	3,915		$	5,113		$	4,842		$	11,244

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
	As of
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18
Risk-based Capital Ratios - Company
Tier I leverage ratio		9.30	%		9.00	%		8.91	%		8.70	%		9.18	%
Common equity Tier I risk-based capital ratio		9.57			9.44			9.21			8.92			8.98
Tier I risk-based capital ratio		11.29			11.08			10.83			10.41			11.03
Total risk-based capital ratio		12.32			12.23			12.07			11.76			12.56
Risk-based Capital Ratios – Limestone Bank
Tier I leverage ratio		9.88	%		9.60	%		9.51	%		9.37	%		9.31	%
Common equity Tier I risk-based capital ratio		12.01			11.83			11.56			11.23			11.18
Tier I risk-based capital ratio		12.01			11.83			11.56			11.23			11.18
Total risk-based capital ratio		13.01			12.88			12.60			12.26			12.43
FTE employees		207			214			215			217			214
Non-GAAP Financial Measures Reconciliation
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 net gains on the sale of securities from the calculation. Management believes this provides a reasonable measure of primary banking expenses relative to primary banking revenue.
	Three Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18
Efficiency Ratio	(in thousands)
Net interest income	$	8,959		$	8,704		$	8,412		$	8,374		$	8,181
Non-interest income		1,284			1,672			1,509			1,347			1,251
Less: Net gain (loss) on securities		—			—			—			(6	)		—
Revenue used for efficiency ratio		10,243			10,376			9,921			9,727			9,432
Non-interest expense		7,281			7,322			7,230			7,405			7,169
Efficiency ratio		71.08	%		70.57	%		72.88	%		76.13	%		76.01	%

CONTACT:
John T. Taylor
Chief Executive Officer
(502) 499-4800