Limestone Bancorp : Reports Net Income of $3.4 Million, or $0.45 Per Diluted Share, for the 4th Quarter of 2021 and $14.9 Million, or $1.96 Per Diluted Share, for the Twelve Months Ended December 31, 2021 - Form 8-K

Limestone Bancorp Reports Net Income of $3.4 Million, or $0.45 Per Diluted Share, for the 4^th Quarter of 2021 and $14.9 Million, or $1.96 Per Diluted Share, for the Twelve Months Ended December 31, 2021

LOUISVILLE, Ky.--(BUSINESS WIRE)--January 19, 2022--Limestone Bancorp, Inc. (NASDAQ: LMST) (the "Company"), parent company of Limestone Bank, Inc. (the "Bank"), today reported unaudited results for the fourth quarter of 2021. Net income available to common shareholders for the fourth quarter of 2021 was $3.4 million, or $0.45 per basic and diluted common share, compared with $3.1 million, or $0.42 per basic and diluted share, for the fourth quarter of 2020. Net income for the twelve months ended December 31, 2021, was $14.9 million, or $1.96 per diluted common share, compared with net income of $9.0 million, or $1.20 per diluted share, for the twelve months ended December 31, 2020.

"Our Limestone team went above and beyond over the past year to serve our customers in a difficult environment. Through their efforts, we achieved 4% loan growth, 8% deposit growth, and nearly 13% tangible book value¹ growth," said John T. Taylor, President and CEO. "Since the second quarter of 2020, Limestone has assisted customers and communities through the SBA Paycheck Protection Program ("PPP"). I commend our team of community bankers who helped our customers obtain approximately 1,500 PPP loans, which totaled $65.9 million and resulted in fee income of $2.8 million in 2021 and $1.1 million in 2020."

Assets increased $62.8 million, or 4.6%, during the fourth quarter. The loan portfolio increased $33.8 million, or 3.5%, during the fourth quarter to $1.0 billion at December 31, 2021, compared to $968.1 million at September 30, 2021, and $962.1 million at December 31, 2020. PPP loans totaled $1.2 million at December 31, 2021, compared to $5.7 million at September 30, 2021, and $20.3 million at December 31, 2020.

Net Interest Income and Average Earning Assets - Net interest income decreased to $11.0 million for the fourth quarter of 2021, compared to $11.6 million for the third quarter of 2021, and increased compared to $10.8 million for the fourth quarter of 2020. Average loans increased to $955.5 million for the fourth quarter of 2021, compared to $952.6 million for the third quarter of 2021, and decreased from $965.3 million for the fourth quarter of 2020.

Net interest margin decreased to 3.32% for the fourth quarter of 2021, compared with 3.61% for the third quarter of 2021, and 3.53% for the fourth quarter of 2020. The yield on earning assets decreased to 3.71% in the fourth quarter of 2021, compared to 4.03% in the third quarter of 2021, and 4.12% in the fourth quarter of 2020. The yield on earning assets for the year ended December 31, 2021, was negatively impacted by lower interest rates on the Bank's fed funds, certain floating rate investment securities, loans with variable rate pricing features, and new loans originated in the lower interest rate environment, including PPP loans which carry a rate of 1.0%. The negative impact of lower 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 $967,000, $1.5 million, and $1.0 million for the quarters ended December 31, 2021, September 30, 2021, and December 31, 2020, respectively. This represents 29 basis points, 48 basis points, and 33 basis points of yield on earning assets and net interest margin for the quarters ended December 31, 2021, September 30, 2021, and December 31, 2020, respectively. Loan fee income for the fourth quarter of 2021 included $261,000 in fees earned on SBA PPP loans, compared to $1.4 million in the third quarter of 2021, and $767,000 in the fourth quarter of 2020, which represents eight basis points, 43 basis points, and 25 basis points of earning asset yield and net interest margin for those quarters, respectively. Unearned PPP loan origination fees totaled $45,000 at December 31, 2021.

The cost of interest-bearing liabilities was 0.53% for the fourth quarter of 2021, compared to 0.56% in the third quarter of 2021, and 0.76% in the fourth quarter of 2020. The cost of interest-bearing liabilities continued to decline as a result of continued improvement in deposit mix, as well as the downward repricing of time deposits. Time deposits declined $14.5 million during the fourth quarter of 2021 as approximately $48.2 million of time deposits with an average rate of 0.32% matured and redeemed or repriced at lower interest rates. During the fourth quarter of 2021, newly originated or renewed time deposits had an average rate of 0.16% and an average term of approximately 11 months.

Net interest income increased to $44.2 million for the year ended December 31, 2021, compared with $40.6 million for 2020. Average loans decreased to $958.5 million for 2021, compared to $964.1 million for 2020. PPP loans averaged $15.5 million and $22.5 million for year ended December 31, 2021 and 2020, respectively.

Net interest margin increased to 3.48% for 2021, compared with 3.36% for 2020. The yield on earning assets decreased to 3.92% for the year ended December 31, 2021, compared to 4.20% for 2020. The amount of loan fee income included in total interest income was $4.3 million and $2.1 million for year ended December 31, 2021 and 2020, respectively. This represents 33 basis points and 18 basis points of yield on earning assets and net interest margin for 2021 and 2020, respectively. Loan fee income included PPP fees of $2.8 million and $1.1 million for year ended December 31, 2021 and 2020, respectively, which represents 21 basis points and 10 basis points of earning asset yield and net interest margin, respectively. The cost of interest-bearing liabilities was 0.59% for 2021, compared to 1.05% for 2020.

As of December 31, 2021, time deposits comprise $266.0 million of the Company's liabilities including $55.0 million with a current average rate of 0.33%, which reprice or mature in the first quarter of 2022. The following table denotes contractual time deposit maturities and average rates as of December 31, 2021:

	Maturity Quarter		As of December 31, 2021 (in thousands)		Weighted Average Rate
	Q1-2022			55,049		0.33
	Q2-2022			55,081		0.30
	Q3-2022			28,528		0.37
	Q4-2022			23,259		0.28
	Thereafter			104,094		0.87
	Total time deposits		$	266,011		0.53	%

Provision and Allowance for Loan Losses - The allowance for loan losses to total loans was 1.15% at December 31, 2021, compared to 1.34% at September 30, 2021, and 1.29% at December 31, 2020.

Net loan charge-offs were $2.1 million for 2021, compared to net loan charge-offs of $333,000 for 2020. At the beginning of the fourth quarter, the Bank had one remaining commercial real estate loan secured by a retail entertainment facility that remained subject to an eligible loan modification under Section 4013 of the CARES Act. This loan totaled $4.4 million, had been graded substandard, evaluated under ASC-310-10, and allocated a specific reserve of $2.2 million since December 2020. Given the uncertainty of the borrower's ability to return to amortizing principal and interest payments, this loan was placed on nonaccrual during the fourth quarter of 2021 and a partial charge-off of the specifically allocated $2.2 million reserve was recognized. The remaining balance of this loan was $2.2 million at December 31, 2021.

A provision for loan loss of $500,000 and $1.2 million, or $0.05 and $0.11 per common share after taxes, was recorded in the fourth quarter and the year ended December 31, 2021, respectively, compared to $900,000 and $4.4 million, or $0.09 and $0.46 per common share after taxes, in the fourth quarter and the year ended December 31, 2020, respectively. The 2021 loan loss provisions were attributable to net loan charge-offs impacting historical loss percentages and growth trends within the portfolio during the fourth quarter and year, while the provisions for 2020 were largely attributable to the uncertainty surrounding the COVID-19 pandemic related economic and business disruptions.

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 continued uncertainty surrounding the COVID-19 pandemic.

Non-interest Income and Expense - Non-interest income for the fourth quarter of 2021 increased $207,000 to $2.0 million, compared with $1.8 million for the fourth quarter of 2020. The increase was primarily related to an increase in bank card interchange fees of $157,000 due to an increase in debit card transactions. Non-interest expense increased $117,000, or 1.5%, to $8.0 million for the fourth quarter of 2021, compared with $7.9 million for the fourth quarter of 2020. The increase in the fourth quarter of 2021 was primarily due to an increase in salaries and employee benefits of $434,000 as a result of an increase in average FTEs as well as a moderate increase in performance-based incentive compensation. This increase was partially offset by a decrease in deposit and state franchise tax expense of $290,000, as a result of the elimination of the Kentucky bank franchise tax discussed below.

Non-interest income for the year ended December 31, 2021, increased $1.6 million to $8.4 million, compared with $6.8 million for the year ended December 31, 2020. The increase was primarily due to an increase in bank card interchange fees of $740,000 as a result of an increase in debit card transactions, a $191,000 gain on the sale of OREO from the second quarter of 2021, and a $465,000 gain on the call of a corporate bond from the Bank's available for sale securities portfolio from the third quarter of 2021. Non-interest expense decreased $445,000, or 1.4%, to $32.0 million for the year ended December 31, 2021, compared with $32.4 million for the year ended December 31, 2020. The decrease was primarily attributable to a decrease of $1.1 million in deposit and state franchise tax expense. This decrease was partially offset by an increase in salaries and employee benefits of $381,000 attributable to moderate merit increases in compensation and performance-based incentive compensation partially offset in 2021 by year over year average FTE reductions. Additionally, deposit account related expense increased $268,000 due to an increase in debit card transactions.

Income Taxes -Income tax expense was $1.1 million and $4.6 million for the fourth quarter of 2021 and for the year ended December 31, 2021, respectively, compared with $680,000 and $1.6 million for the fourth quarter of 2020 and for the year ended December 31, 2020, respectively. 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 $215,000 and $939,000 for the fourth quarter of 2021 and for the year ended December 31, 2021, respectively, compared to a state income tax benefit of $82,000 and $478,000 for the fourth quarter of 2020 and for the year ended December 31, 2020, respectively, which were 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 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, 2020.

Additional Information

Unaudited supplemental financial information for the fourth quarter ending December 31, 2021, 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
	12/31/21		12/31/20		12/31/21		12/31/20
Income Statement Data
Interest income	$	12,314		$	12,606		$	49,915		$	50,753
Interest expense		1,307			1,820			5,693			10,152
Net interest income		11,007			10,786			44,222			40,601
Provision for loan losses		500			900			1,150			4,400
Net interest income after provision		10,507			9,886			43,072			36,201
Service charges on deposit accounts		605			594			2,256			2,268
Bank card interchange fees		1,039			882			4,116			3,376
Bank owned life insurance income		106			99			526			424
Gain on sale of OREO		-			-			191			-
Gain (loss) on sales and calls of securities, net		-			-			460			(5	)
Other		234			202			890			781
Non-interest income		1,984			1,777			8,439			6,844
Salaries & employee benefits		4,601			4,167			18,132			17,751
Occupancy and equipment		978			1,011			4,041			4,001
Professional fees		251			233			952			937
Marketing expense		166			177			727			629
FDIC insurance		90			81			405			229
Data processing expense		379			381			1,512			1,502
Deposit and state franchise tax		105			395			375			1,475
Deposit account related expense		566			492			2,158			1,890
Communications expense		161			190			681			856
Insurance expense		91			112			415			428
Postage and delivery		145			151			605			627
Other		450			476			1,968			2,091
Non-interest expense		7,983			7,866			31,971			32,416
Income before income taxes		4,508			3,797			19,540			10,629
Income tax expense		1,063			680			4,631			1,624
Net income	$	3,445		$	3,117		$	14,909		$	9,005
Weighted average shares - Basic		7,597,256			7,499,323			7,593,176			7,492,190
Weighted average shares - Diluted		7,597,256			7,499,323			7,593,176			7,492,190
Basic earnings per common share	$	0.45		$	0.42		$	1.96		$	1.20
Diluted earnings per common share	$	0.45		$	0.42		$	1.96		$	1.20
Cash dividends declared per common share	$	0.00		$	0.00		$	0.00		$	0.00
Performance Ratios
Return on average assets		0.97	%		0.95	%		1.09	%		0.70	%
Return on average equity		10.51			10.89			12.03			8.19
Yield on average earning assets (tax equivalent)		3.71			4.12			3.92			4.20
Cost of interest-bearing liabilities		0.53			0.76			0.59			1.05
Net interest margin (tax equivalent)		3.32			3.53			3.48			3.36
Efficiency ratio2		61.45			62.61			61.25			68.32
Non-interest expense to average assets		2.25			2.40			2.34			2.50

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
	12/31/21		9/30/21		6/30/21		3/31/21		12/31/20
Income Statement Data
Interest income	$	12,314		$	12,975		$	12,376		$	12,250		$	12,606
Interest expense		1,307			1,354			1,462			1,570			1,820
Net interest income		11,007			11,621			10,914			10,680			10,786
Provision for loan losses		500			300			-			350			900
Net interest income after provision		10,507			11,321			10,914			10,330			9,886
Service charges on deposit accounts		605			583			520			548			594
Bank card interchange fees		1,039			1,044			1,073			960			882
Bank owned life insurance income		106			112			143			165			99
Gain on sale of OREO		-			-			191			-			-
Gain (loss) on sales and calls of securities, net		-			465			(5	)		-			-
Other		234			232			213			211			202
Non-interest income		1,984			2,436			2,135			1,884			1,777
Salaries & employee benefits		4,601			4,582			4,467			4,482			4,167
Occupancy and equipment		978			1,024			979			1,060			1,011
Professional fees		251			219			246			236			233
Marketing expense		166			200			179			182			177
FDIC insurance		90			90			90			135			81
Data processing expense		379			378			377			378			381
Deposit and state franchise tax		105			90			90			90			395
Deposit account related expense		566			545			556			491			492
Communications expense		161			153			194			173			190
Insurance expense		91			105			115			104			112
Postage and delivery		145			169			139			152			151
Other		450			495			522			501			476
Non-interest expense		7,983			8,050			7,954			7,984			7,866
Income before income taxes		4,508			5,707			5,095			4,230			3,797
Income tax expense		1,063			1,366			1,194			1,008			680
Net income	$	3,445		$	4,341		$	3,901		$	3,222		$	3,117
Weighted average shares - Basic		7,597,256			7,602,686			7,597,202			7,575,211			7,499,323
Weighted average shares - Diluted		7,597,256			7,602,686			7,597,202			7,575,211			7,499,323
Basic earnings per common share	$	0.45		$	0.57		$	0.51		$	0.43		$	0.42
Diluted earnings per common share	$	0.45		$	0.57		$	0.51		$	0.43		$	0.42
Cash dividends declared per common share	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00
Performance Ratios
Return on average assets		0.97	%		1.26	%		1.15	%		0.99	%		0.95	%
Return on average equity		10.51			13.61			12.89			11.11			10.89
Yield on average earning assets (tax equivalent)		3.71			4.03			3.91			4.05			4.12
Cost of interest-bearing liabilities		0.53			0.56			0.61			0.68			0.76
Net interest margin (tax equivalent)		3.32			3.61			3.45			3.53			3.53
Efficiency ratio		61.45			59.23			60.93			63.55			62.61
Non-interest expense to average assets		2.25			2.33			2.34			2.46			2.40

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
		As of
		12/31/21		9/30/21		6/30/21		3/31/21		12/31/20
Assets
Loans	$	1,001,840		$	968,088		$	947,425		$	978,865		$	962,081
Allowance for loan losses		(11,531	)		(12,973	)		(12,637	)		(12,755	)		(12,443	)
Net loans		990,309			955,115			934,788			966,110			949,638
Securities held to maturity		46,460			47,539			46,717			41,254			-
Securities available for sale		214,213			203,548			182,154			177,690			203,862
Federal funds sold & interest-bearing deposits		67,110			44,909			75,536			74,047			56,863
Cash and due from financial institutions		10,493			13,579			9,584			9,800			10,830
Premises and equipment		21,575			21,623			21,912			20,405			18,533
Premises held for sale		310			980			980			1,035			1,060
Bank owned life insurance		23,946			23,845			23,738			23,601			23,441
FHLB Stock		5,116			5,116			5,449			5,810			5,887
Other real estate owned		-			-			-			1,765			1,765
Deferred taxes, net		21,583			22,161			23,452			24,992			25,714
Goodwill		6,252			6,252			6,252			6,252			6,252
Intangible assets		1,989			2,053			2,117			2,181			2,244
Accrued interest receivable and other assets		6,336			6,128			6,231			6,769			6,213
Total Assets	$	1,415,692		$	1,352,848		$	1,338,910		$	1,361,711		$	1,312,302
Liabilities and Equity
Certificates of deposit	$	266,011		$	280,545		$	303,668		$	355,309		$	367,552
Interest checking		287,208			239,923			216,344			211,322			190,625
Money market		217,943			198,470			191,773			180,137			175,785
Savings		163,423			163,018			160,257			151,340			142,623
Total interest-bearing deposits		934,585			881,956			872,042			898,108			876,585
Demand deposits		274,083			266,035			267,059			268,882			243,022
Total deposits		1,208,668			1,147,991			1,139,101			1,166,990			1,119,607
FHLB advances		20,000			20,000			20,000			20,613			20,623
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		10,065			10,193			9,850			8,588			10,048
Total liabilities		1,284,733			1,224,184			1,214,951			1,242,191			1,196,278
Total stockholders' equity		130,959			128,664			123,959			119,520			116,024
Total Liabilities and Stockholders' Equity	$	1,415,692		$	1,352,848		$	1,338,910		$	1,361,711		$	1,312,302
Ending shares outstanding		7,594,749			7,602,686			7,602,686			7,594,499			7,498,865
Book value per common share	$	17.24		$	16.92		$	16.30		$	15.74		$	15.47
Tangible book value per common share1		16.16			15.83			15.20			14.63			14.34

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
		As of
		12/31/21			9/30/21			6/30/21			3/31/21			12/31/20
Average Balance Sheet Data
Assets	$	1,405,219		$	1,369,372		$	1,361,080		$	1,316,878		$	1,304,715
Loans		955,516			952,567			961,922			964,353			965,339
Earning assets		1,322,821			1,284,188			1,275,363			1,230,610			1,220,043
Deposits		1,199,334			1,166,785			1,164,524			1,125,943			1,115,985
Long-term debt and advances		66,000			66,000			66,000			66,617			67,280
Interest bearing liabilities		982,132			954,007			956,172			941,342			951,620
Stockholders' equity		129,998			126,556			121,386			117,663			113,868
Asset Quality Data
Nonaccrual loans	$	3,124		$	1,627		$	1,530		$	1,996		$	1,676
Troubled debt restructurings on accrual		340			561			390			399			480
Loan 90 days or more past due still on accrual		-			-			-			-			-
Total non-performing loans		3,464			2,188			1,920			2,395			2,156
Real estate acquired through foreclosures		-			-			-			1,765			1,765
Other repossessed assets		-			-			-			-			-
Total non-performing assets	$	3,464		$	2,188		$	1,920		$	4,160		$	3,921
Non-performing loans to total loans		0.35	%		0.23	%		0.20	%		0.24	%		0.22	%
Non-performing assets to total assets		0.24			0.16			0.14			0.31			0.30
Allowance for loan losses to non-performing loans		332.88			592.92			658.18			532.57			577.13
Allowance for loan losses to total loans		1.15	%		1.34	%		1.33	%		1.30	%		1.29	%
Loan Charge-off Data
Loans charged off	$	(2,246	)	$	(25	)	$	(178	)	$	(77	)	$	(124	)
Recoveries		304			61			60			39			186
Net (charge-offs) recoveries	$	(1,942	)	$	36		$	(118	)	$	(38	)	$	62
Loans by Risk Category3
Pass	$	977,962		$	945,396		$	913,753		$	942,492		$	926,025
Watch		7,856			3,407			15,888			17,929			18,879
Special Mention		-			-			-			-			-
Substandard		16,022			19,285			17,784			18,444			17,177
Doubtful		-			-			-			-			-
Total	$	1,001,840		$	968,088		$	947,425		$	978,865		$	962,081
Loans by Past Due Status
Past due loans:
30 - 59 days	$	556		$	630		$	181		$	677		$	1,537
60 - 89 days		210			142			252			254			372
90 days or more		-			-			-			-			-
Nonaccrual loans		3,124			1,627			1,530			1,996			1,676
Total past due and nonaccrual loans	$	3,890		$	2,399		$	1,963		$	2,927		$	3,585

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
		As of
		12/31/21			9/30/21			6/30/21			3/31/21			12/31/20
Risk-based Capital Ratios - Company
Tier I leverage ratio		9.14	%		9.39	%		8.70	%		8.59	%		8.24	%
Common equity Tier I risk-based capital ratio		9.00			9.37			9.48			8.96			8.72
Tier I risk-based capital ratio		10.38			10.86			10.63			10.00			9.67
Total risk-based capital ratio		13.41			14.13			14.09			13.42			13.14
Risk-based Capital Ratios - Limestone Bank
Tier I leverage ratio		10.84	%		10.96	%		10.55	%		10.44	%		10.21	%
Common equity Tier I risk-based capital ratio		12.35			12.68			12.95			12.21			12.05
Tier I risk-based capital ratio		12.35			12.68			12.95			12.21			12.05
Total risk-based capital ratio		13.31			13.80			14.11			13.37			13.20
FTE employees, end of period		227			232			231			225			219

Footnotes:

⁽¹⁾ 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
		12/31/21			9/30/21			6/30/21			3/31/21			12/31/20
Tangible Book Value Per Share	(in thousands, except share and per share data)
Common stockholders' equity	$	130,959		$	128,664		$	123,959		$	119,520		$	116,024
Less: Goodwill		6,252			6,252			6,252			6,252			6,252
Less: Intangible assets		1,989			2,053			2,117			2,181			2,244
Tangible common equity		122,718			120,359			115,590			111,087			107,528
Shares outstanding		7,594,749			7,602,686			7,602,686			7,594,499			7,498,865
Tangible book value per common share	$	16.16		$	15.83		$	15.20		$	14.63		$	14.34
Book value per common share		17.24			16.92			16.30			15.74			15.47

⁽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
		12/31/21			9/30/21			6/30/21			3/31/21			12/31/20
Efficiency Ratio	(in thousands)
Net interest income	$	11,007		$	11,621		$	10,914		$	10,680		$	10,786
Non-interest income		1,984			2,436			2,135			1,884			1,777
Less: Net gain (loss) on securities		-			465			(5	)		-			-
Revenue used for efficiency ratio		12,991			13,592			13,054			12,564			12,563
Non-interest expense		7,983			8,050			7,954			7,984			7,866
Efficiency ratio		61.45	%		59.23	%		60.93	%		63.55	%		62.61	%
		Twelve Months Ended
		12/31/21			12/31/20
Efficiency Ratio
Net interest income	$	44,222		$	40,601
Non-interest income		8,439			6,844
Less: Net gain (loss) on securities		460			(5	)
Revenue used for efficiency ratio		52,201			47,450
Non-interest expense		31,971			32,416
Efficiency ratio		61.25	%		68.32	%

⁽³⁾ Loans by Risk Category reflect management's risk ratings based on categories aligned with the bank regulatory definitions.

Contacts

John T. Taylor
Chief Executive Officer
[phone]