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

Rhea-AI Summary

Limestone Bancorp, parent of Limestone Bank, reported Q1 2021 net income of $3.2 million, up from $1.8 million YoY. Total assets increased to $1.36 billion, and the loan portfolio rose by 1.7% to $978.9 million. Net interest income stood at $10.7 million, while net interest margin was stable at 3.53%. The company maintained an allowance for loan losses of 1.30%. Non-interest income improved to $1.9 million, and expenses decreased to $8.0 million. The elimination of Kentucky’s bank franchise tax positively impacted net income.

Positive

• Net income rose to $3.2 million, a 78% increase YoY.
• Total assets grew to $1.36 billion, up from $1.31 billion.
• Loan portfolio increased by 1.7%, reaching $978.9 million.
• Non-interest income increased to $1.9 million.
• Non-interest expense decreased by 3.0% to $8.0 million.

Negative

• Average loans decreased slightly to $964.4 million from $965.3 million QoQ.
• Net interest income declined from $10.8 million in Q4 2020 to $10.7 million.
• Loan fee income decreased to $844,000 from $1.0 million QoQ.

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
Accrued interest payable and other liabilities		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/

FAQ

What were Limestone Bancorp's Q1 2021 earnings?

Limestone Bancorp reported net income of $3.2 million for Q1 2021.

How did total assets change for Limestone Bancorp in Q1 2021?

Total assets rose to $1.36 billion as of March 31, 2021.

What is the loan portfolio growth for Limestone Bancorp in Q1 2021?

The loan portfolio increased by 1.7%, totaling $978.9 million.

What was the net interest margin for Limestone Bancorp in Q1 2021?

The net interest margin was stable at 3.53%.

How did non-interest expenses change for Limestone Bancorp in Q1 2021?

Non-interest expenses decreased by 3.0% to $8.0 million.