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Limestone Bancorp Reports Net Income of $3.2 million, or $0.43 per Share, for the 1st Quarter of 2021

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Limestone Bancorp, Inc. (NASDAQ: LMST) ("the Company"), parent company of Limestone Bank ("the Bank"), today reported unaudited results for the first quarter of 2021. Net income available to common shareholders for the first quarter of 2021 was $3.2 million, or $0.43 per basic and diluted common share, compared with $1.8 million, or $0.25 per basic and diluted common share, for the first quarter of 2020.

John T. Taylor, Chief Executive Officer, stated, "After navigating a challenging environment throughout 2020, we are well-pleased with Limestone’s performance in the first quarter of 2021. Our Limestone Bank associates continue to demonstrate their commitment to delivering high quality banking products and services to our customers. We reopened many of our lobbies during the first quarter and also opened a new banking center in our Louisville metro market, which will enable us to better serve those customers."

Total assets grew to $1.36 billion as of March 31, 2021, compared to $1.31 billion at December 31, 2020. The loan portfolio increased $16.8 million, or 1.7%, during the quarter. Loans increased to $978.9 million at March 31, 2021, compared to $962.1 million at December 31, 2020.

Net Interest Income and Average Earning Assets – Net interest income was $10.7 million for the first quarter of 2021, compared to $10.8 million for the fourth quarter of 2020, and $9.8 million for the first quarter of 2020. Average loans decreased to $964.4 million for the first quarter of 2021, compared to $965.3 million for the fourth quarter of 2020, and increased compared to $949.2 million for the first quarter of 2020. Average loans for the first quarter of 2021 were positively impacted by $18.6 million of loan originations under the SBA Paycheck Protection Program ("PPP") and $42.4 million during 2020. PPP loan balances totaled $27.9 million at March 31, 2021, compared to $20.3 million at December 31, 2020.

Net interest margin was 3.53% for the first quarter of 2021 and the fourth quarter of 2020, compared to 3.31% for the first quarter of 2020. The yield on earning assets decreased to 4.05% in the first quarter of 2021, compared to 4.12% in the fourth quarter of 2020, and 4.50% in the first quarter of 2020. The yield on earning assets in the first quarter of 2021 and fourth quarter of 2020 were negatively impacted by lower interest rates on the Bank’s fed funds, certain floating rate investment securities, and loans with variable rate repricing features. 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 $844,000, $1.0 million, and $216,000 for the quarters ended March 31, 2021, December 31, 2020, and March 31, 2020, respectively. This represents 28 basis points, 33 basis points, and eight basis points of yield on earning assets and net interest margin for the quarters ended March 31, 2021, December 31, 2020, and March 31, 2020, respectively. Loan fee income for the first quarter of 2021 included $436,000 in fees earned on SBA PPP loans, as compared to $767,000 in the fourth quarter of 2020.

The cost of interest-bearing liabilities was 0.68% for the first quarter of 2021, compared to 0.76% in the fourth quarter of 2020, and 1.45% in the first quarter of 2020. The cost of interest-bearing liabilities continued to decline primarily based on the downward repricing of time deposits. Time deposits declined $12.2 million during the first quarter of 2021 as approximately $104.9 million of time deposits with an average rate of 0.99% matured or repriced at lower interest rates. During the first quarter of 2021, newly originated or renewed time deposits had an average rate of 0.23% and a weighted average term of approximately 14 months.

As of March 31, 2021, time deposits comprise $355.3 million of the Company’s liabilities including $105.6 million with a current average rate of 0.56%, which reprice or mature in the second quarter of 2021. The following table denotes contractual time deposit maturities and average rates as of March 31, 2021:

Maturity

Quarter

As of
March 31,
2021
(in thousands)

Weighted
Average Rate

Q2-2021

105,560

0.56

Q3-2021

64,819

0.44

Q4-2021

34,653

0.38

Q1-2022

41,536

0.39

Q2-2022

12,267

0.66

Thereafter

96,474

1.02

Total time deposits

$

355,309

0.63

%

Provision and Allowance for Loan Losses – The allowance for loan losses to total loans was 1.30% at March 31, 2021, compared to 1.29% at December 31, 2020, and 0.95% at March 31, 2020. A provision for loan loss of $350,000, or $0.04 per common share after taxes, was recorded in the first quarter of 2021, compared to $1.05 million, or $0.11 per common share after taxes, in the first quarter of 2020. The 2021 loan loss provision was attributable to the net loan charge-offs and growth within the portfolio during the quarter, while the provision for 2020 was largely attributable to the uncertainty surrounding the COVID-19 pandemic related economic and business disruptions. Net loan charge-offs were $38,000 for the first quarter of 2021, compared to net loan charge-offs of $276,000 for the first quarter of 2020.

While the U.S. Government’s economic responses to the COVID-19 pandemic through monetary policy and fiscal stimulus have provided meaningful support to the economy, management deemed it prudent to continue to maintain its qualitative environmental factor in the allowance for loan losses to account for the pandemic risk. The Bank also granted eligible short-term loan modifications under Section 4013 of the CARES Act. Short-term loan modifications declined to $4.7 million as of March 31, 2021, compared to $15.3 million at December 31, 2020. Included in the $4.7 million of short-term modifications, is one commercial real estate loan secured by a retail facility totaling $4.4 million, which remains subject to, and is performing in accordance with, an interest only short-term COVID-19 modification. The loan is graded substandard, has been evaluated under ASC-310-10, and allocated a specific reserve of $2.2 million as of March 31, 2021 and December 31, 2020.

Non-interest Income and Expense – Non-interest income for the first quarter of 2021 increased $160,000 to $1.9 million, compared with $1.7 million for the first quarter of 2020. The increase was primarily related to bank card interchange fees of $210,000, partially offset by a decrease of $120,000 in service charges on deposit accounts. Non-interest expense decreased $251,000, or 3.0%, to $8.0 million for the first quarter of 2021, compared with $8.2 million for the first quarter of 2020. Deposit and state franchise tax expense decreased $270,000 as a result of the elimination of the Kentucky bank franchise tax as discussed below.

Income Taxes – Income tax expense was $1.0 million for the first quarter of 2021, compared with $361,000 for the first quarter of 2020. Effective January 1, 2021, the state of Kentucky eliminated the bank franchise tax, which was previously recorded as a non-interest expense, and implemented a state income tax at a statutory rate of 5%. State income tax expense was $214,000 for the first quarter of 2021, compared to a state income tax benefit of $72,000 for the first quarter of 2020, which was related to the establishment of a net deferred tax asset due to the tax law change.

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 and national, state and local emergency conditions the pandemic has produced; 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, regulation, fiscal, and monetary policies, 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, 2020.

Additional Information

Unaudited supplemental financial information for the first quarter ending March 31, 2021, follows.

LIMESTONE BANCORP, INC.

Unaudited Financial Information

(in thousands, except share and per share data)

Three Months Ended

3/31/21

3/31/20

Income Statement Data

Interest income

$

12,250

$

13,267

Interest expense

1,570

3,505

Net interest income

10,680

9,762

Provision for loan losses

350

1,050

Net interest income after provision

10,330

8,712

Service charges on deposit accounts

548

668

Bank card interchange fees

960

750

Bank owned life insurance income

165

96

Other

211

210

Non-interest income

1,884

1,724

Salaries & employee benefits

4,482

4,538

Occupancy and equipment

1,060

999

Professional fees

236

208

Marketing expense

182

214

FDIC insurance

135

Data processing expense

378

359

Deposit and state franchise tax

90

360

Deposit account related expense

491

451

Communications expense

173

218

Insurance expense

104

103

Postage and delivery

152

168

Other

501

617

Non-interest expense

7,984

8,235

Income before income taxes

4,230

2,201

Income tax expense

1,008

361

Net income

3,222

1,840

Weighted average shares – Basic

7,575,211

7,481,884

Weighted average shares – Diluted

7,575,211

7,481,884

Basic earnings per common share

$

0.43

$

0.25

Diluted earnings per common share

$

0.43

$

0.25

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

3/31/21

12/31/20

9/30/20

6/30/20

3/31/20

Income Statement Data

Interest income

$

12,250

$

12,606

$

12,094

$

12,786

$

13,267

Interest expense

1,570

1,820

2,151

2,676

3,505

Net interest income

10,680

10,786

9,943

10,110

9,762

Provision for loan losses

350

900

1,350

1,100

1,050

Net interest income after provision

10,330

9,886

8,593

9,010

8,712

Service charges on deposit accounts

548

594

565

441

668

Bank card interchange fees

960

882

881

863

750

Bank owned life insurance income

165

99

113

116

96

Gain (loss) on sales and calls of securities, net

(5

)

Other

211

202

183

186

210

Non-interest income

1,884

1,777

1,742

1,601

1,724

Salaries & employee benefits

4,482

4,167

4,413

4,633

4,538

Occupancy and equipment

1,060

1,011

1,008

983

999

Professional fees

236

233

261

235

208

Marketing expense

182

177

134

104

214

FDIC insurance

135

81

81

67

Data processing expense

378

381

382

380

359

Deposit and state franchise tax

90

395

360

360

360

Deposit account related expense

491

492

487

460

451

Communications expense

173

190

201

247

218

Insurance expense

104

112

102

111

103

Postage and delivery

152

151

156

152

168

Other

501

476

494

504

617

Non-interest expense

7,984

7,866

8,079

8,236

8,235

Income before income taxes

4,230

3,797

2,256

2,375

2,201

Income tax expense

1,008

680

190

393

361

Net income

$

3,222

$

3,117

$

2,066

$

1,982

$

1,840

Weighted average shares – Basic

7,575,211

7,499,323

7,499,223

7,488,173

7,481,884

Weighted average shares – Diluted

7,575,211

7,499,323

7,499,223

7,488,173

7,481,884

Basic earnings per common share

$

0.43

$

0.42

$

0.28

$

0.26

$

0.25

Diluted earnings per common share

$

0.43

$

0.42

$

0.28

$

0.26

$

0.25

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

3/31/21

12/31/20

9/30/20

6/30/20

3/31/20

Assets

Loans

$

978,865

$

962,081

$

974,468

$

975,759

$

961,561

Allowance for loan losses

(12,755

)

(12,443

)

(11,481

)

(10,228

)

(9,150)

Net loans

966,110

949,638

962,987

965,531

952,411

Securities held to maturity

41,254

Securities available for sale

177,690

203,862

203,544

202,596

198,657

Federal funds sold & interest-bearing deposits

74,047

56,863

24,358

39,027

23,639

Cash and due from financial institutions

9,800

10,830

7,593

9,990

9,509

Premises and equipment

20,405

18,533

18,572

19,000

19,282

Premises held for sale

1,035

1,060

1,110

1,149

1,185

Bank owned life insurance

23,601

23,441

23,347

16,238

16,128

FHLB Stock

5,810

5,887

5,962

6,142

6,837

Other real estate owned

1,765

1,765

1,625

1,625

3,225

Deferred taxes, net

24,992

25,714

26,540

27,054

28,208

Goodwill

6,252

6,252

6,252

6,252

6,252

Intangible assets

2,181

2,244

2,308

2,372

2,436

Accrued interest receivable and other assets

6,769

6,213

7,426

7,532

6,441

Total Assets

$

1,361,711

$

1,312,302

$

1,291,624

$

1,304,508

$

1,274,210

Liabilities and Equity

Certificates of deposit

$

355,309

$

367,552

$

398,429

$

446,370

$

467,535

Interest checking

211,322

190,625

168,735

167,814

157,621

Money market

180,137

175,785

174,588

166,376

154,851

Savings

151,340

142,623

134,962

119,327

92,235

Total interest-bearing deposits

898,108

876,585

876,714

899,887

872,242

Demand deposits

268,882

243,022

217,675

224,901

185,658

Total deposits

1,166,990

1,119,607

1,094,389

1,124,788

1,057,900

FHLB advances

20,613

20,623

30,634

20,644

61,349

Junior subordinated debentures

21,000

21,000

21,000

21,000

21,000

Subordinated capital note

25,000

25,000

25,000

17,000

17,000

Senior debt

5,000

5,000

...

8,588

10,048

8,315

7,020

7,450

Total liabilities

1,242,191

1,196,278

1,179,338

...

1,195,452

1,169,699

Total stockholders’ equity

119,520

116,024

112,286

109,056

104,511

Total Liabilities and Stockholders’ Equity

$

1,361,711

$

1,312,302

$

1,291,624

$

1,304,508

$

1,274,210

Ending shares outstanding

7,594,499

7,498,865

7,499,183

7,485,872

7,489,305

Book value per common share

$

15.74

$

15.47

$

14.97

$

14.57

$

13.95

Tangible book value per common share

14.63

14.34

13.83

13.42

12.79

LIMESTONE BANCORP, INC.

Unaudited Financial Information

(in thousands, except share and per share data)

As of

3/31/21

12/31/20

9/30/20

6/30/20

3/31/20

Average Balance Sheet Data

Assets

$

1,316,878

$

1,304,715

$

1,295,814

$

1,305,923

$

1,273,167

Loans

964,353

965,339

963,486

978,316

949,204

Earning assets

1,230,610

1,220,043

1,213,039

1,222,760

1,188,314

Deposits

1,125,943

1,115,985

1,111,865

1,116,420

1,052,944

Long-term debt and advances

66,617

67,280

65,769

75,259

105,407

Interest bearing liabilities

941,342

951,620

955,661

971,770

971,554

Stockholders’ equity

117,663

113,868

110,930

107,348

107,632

Quarterly Performance Ratios

Return on average assets

0.99

%

0.95

%

0.63

%

0.61

%

0.58

%

Return on average equity

11.11

10.89

7.41

7.43

6.88

Yield on average earning assets (tax equivalent)

4.05

4.12

3.98

4.21

4.50

Cost of interest-bearing liabilities

0.68

0.76

0.90

1.11

1.45

Net interest margin (tax equivalent)

3.53

3.53

3.27

3.33

3.31

Efficiency ratio

63.55

62.61

69.14

70.30

71.70

Non-interest expense to average assets

2.46

2.40

2.48

2.54

2.60

Asset Quality Data

Nonaccrual loans

$

1,996

$

1,676

$

2,038

$

1,410

$

1,500

Troubled debt restructurings on accrual

399

480

489

462

466

Loan 90 days or more past due still on accrual

Total non-performing loans

2,395

2,156

2,527

1,872

1,966

Real estate acquired through foreclosures

1,765

1,765

1,625

1,625

3,225

Other repossessed assets

Total non-performing assets

$

4,160

$

3,921

$

4,152

$

3,497

$

5,191

Non-performing loans to total loans

0.24

%

0.22

%

0.26

%

0.19

%

0.20

%

Non-performing assets to total assets

0.31

0.30

0.32

0.27

0.41

Allowance for loan losses to non-performing loans

532.57

577.13

454.33

546.37

465.41

Allowance for loan losses to total loans

1.30

%

1.29

%

1.18

%

1.05

%

0.95

%

Loan Charge-off Data

Loans charged off

$

(77

)

$

(124

)

$

(150

)

$

(193

)

$

(335

)

Recoveries

39

186

53

171

59

Net (charge-offs) recoveries

$

(38

)

$

62

$

(97

)

$

(22

)

$

(276

)

Loans by Risk Category

Pass

$

942,492

$

926,025

$

923,895

$

925,558

$

915,985

Watch

17,929

18,879

27,782

43,014

38,464

Special Mention

364

Substandard

18,444

17,177

22,427

7,187

7,112

Doubtful

Total

$

978,865

$

962,081

$

974,468

$

975,759

$

961,561

Loans by Past Due Status

Past due loans:

30 – 59 days

$

677

$

1,537

$

482

$

458

$

1,158

60 – 89 days

254

372

265

197

248

90 days or more

Nonaccrual loans

1,996

1,676

2,038

1,410

1,500

Total past due and nonaccrual loans

$

2,927

$

3,585

$

2,785

$

2,065

$

2,906

LIMESTONE BANCORP, INC.

Unaudited Financial Information

(in thousands, except share and per share data)

As of

3/31/21

12/31/20

9/30/20

6/30/20

3/31/20

Risk-based Capital Ratios - Company

Tier I leverage ratio

8.59

%

8.24

%

8.17

%

8.05

%

8.29

%

Common equity Tier I risk-based capital ratio

8.96

8.72

8.54

8.45

8.26

Tier I risk-based capital ratio

10.00

9.67

9.77

9.93

9.86

Total risk-based capital ratio

13.42

13.14

13.22

12.57

12.37

Risk-based Capital Ratios – Limestone Bank

Tier I leverage ratio

10.44

%

10.21

%

9.90

%

9.54

%

9.67

%

Common equity Tier I risk-based capital ratio

12.21

12.05

11.88

11.79

11.50

Tier I risk-based capital ratio

12.21

12.05

11.88

11.79

11.50

Total risk-based capital ratio

13.37

13.20

12.97

12.78

12.38

FTE employees, end of period

225

219

224

228

248

Non-GAAP Financial Measures Reconciliation

Tangible book value per common share is a non-GAAP financial measure derived from GAAP based amounts. Tangible book value is calculated by excluding the balance of 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 tangible assets from the calculation of risk-based capital.

The efficiency ratio is a non-GAAP measure of expense control relative to revenue from net interest income and fee income. 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.

As of

3/31/21

12/31/20

9/30/20

6/30/20

3/31/20

Tangible Book Value Per Share

(in thousands, except share and per share data)

Common stockholders’ equity

$

119,520

$

116,024

$

112,286

$

109,056

$

104,511

Less: Goodwill

6,252

6,252

6,252

6,252

6,252

Less: Intangible assets

2,181

2,244

2,308

2,372

2,436

Tangible common equity

111,087

107,528

103,726

100,432

95,823

Shares outstanding

7,594,499

7,498,865

7,499,183

7,485,872

7,489,305

Tangible book value per common share

$

14.63

$

14.34

$

13.83

$

13.42

$

12.79

Book value per common share

15.74

15.47

14.97

14.57

13.95

Three Months Ended

3/31/21

12/31/20

9/30/20

6/30/20

3/31/20

Efficiency Ratio

(in thousands)

Net interest income

$

10,680

$

10,786

$

9,943

$

10,110

$

9,762

Non-interest income

1,884

1,777

1,742

1,601

1,724

Less: Net gain (loss) on securities

(5

)

Revenue used for efficiency ratio

12,564

12,563

11,685

11,716

11,486

Non-interest expense

7,984

7,866

8,079

8,236

8,235

Efficiency ratio

63.55

%

62.61

%

69.14

%

70.30

%

71.70

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20210421005117/en/

Contacts

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