Limestone Bancorp, Inc. (NASDAQ: LMST) (“the Company”), parent
company of Limestone Bank (“the Bank”), today reported
unaudited results for the fourth quarter of 2018. Net income for
the fourth quarter of 2018 was $2.4 million, or $0.33 per basic and
diluted common share, compared with $33.3 million, or $5.31 per
basic and diluted share, for the fourth quarter of 2017. Net income
for the year ended December 31, 2018, was $8.8 million, or $1.23
per basic and diluted common share, compared with $38.5 million, or
$6.15 per basic and diluted common share, for the year ended
December 31, 2017.
Net income before taxes was $10.8 million for the year ended
December 31, 2018, compared with $6.6 million for the year ended
December 31, 2017. Income tax expense was $2.0 million for 2018 and
income tax benefit was $31.9 million for 2017 due to the reversal
of the Company’s deferred tax asset valuation allowance and the
change in federal corporate tax rates in connection with the
enactment of the Tax Cuts and Jobs Act of 2017.
Net Interest Income – Net interest income was $8.7
million for the fourth quarter of 2018, compared to $8.4 million in
the third quarter of 2018, and $8.0 million in the fourth quarter
of 2017. Average loans increased to $765.5 million for the fourth
quarter of 2018, compared with $748.4 million in the third quarter
of 2018, and $695.6 million for the fourth quarter of 2017. Net
interest margin was relatively stable at 3.46% for the fourth
quarter of 2018, compared to 3.45% for the third quarter of 2018,
and 3.50% for the fourth quarter of 2017.
The yield on earning assets increased to 4.66% for the fourth
quarter of 2018, compared to 4.56% for the third quarter of 2018,
and 4.24% for the fourth quarter of 2017. The cost of interest
bearing liabilities was 1.46% for the fourth quarter of 2018,
compared to 1.32% for the third quarter of 2018, and 0.88% for the
fourth quarter of 2017.
Net interest income increased to $33.7 million for the year
ended December 31, 2018, compared with $31.1 million for 2017.
Average loans increased to $743.4 million for 2018, compared with
$667.5 million for 2017. Net interest margin increased to 3.53% for
2018, compared with 3.48% for 2017. The yield on earning assets
increased to 4.55% for the year ended December 31, 2018, compared
to 4.18% for 2017 and cost of interest bearing liabilities was
1.23% for 2018, compared to 0.83% for 2017.
Provision and Allowance for Loan Losses – Because of
improvement in asset quality, the level of net loan recoveries
during the period, and management’s assessment of risk in the loan
portfolio, a negative provision for loan losses of $500,000 was
recorded for the year ended December 31, 2018, compared to a
negative provision for loan losses of $800,000 for 2017. No
provision was recorded in the fourth quarter of 2018, compared to a
negative provision of $800,000 in the fourth quarter of 2017.
The allowance for loan losses to total loans was 1.16% at
December 31, 2018, compared to 1.14% at September 30, 2018, and
1.15% at December 31, 2017. Net loan recoveries were $1.2 million
for 2018, compared to net loan recoveries of $35,000 for 2017.
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 $6.4 million, or 0.60% of total assets
at December 31, 2018, compared with $7.4 million, or 0.70% of
total assets at September 30, 2018, and $11.1 million, or 1.14% of
total assets, at December 31, 2017. Non-performing loans decreased
to $2.9 million, or 0.38% of total loans at December 31, 2018,
compared with $3.6 million, or 0.48% of total loans at
September 30, 2018, and $6.7 million, or 0.94% of total loans, at
December 31, 2017. The decrease from the previous year was
primarily driven by $3.6 million in principal payments received on
nonaccrual loans, $730,000 of nonaccrual loans migrating to OREO,
and $293,000 of charge-offs offset by $1.2 million in loans placed
on nonaccrual during 2018.
OREO at December 31, 2018, decreased to $3.5 million, compared
with $3.8 million at September 30, 2018, and $4.4 million at
December 31, 2017. During the year, the Company sold $876,000 in
OREO and acquired $730,000 in new OREO properties. Fair value
write-downs arising from changing marketing strategies and new
appraisals totaled $850,000 for 2018, compared to $2.0 million for
2017.
Non-interest Income and Expense – Non-interest income
increased $375,000 to $5.8 million for the year ended December 31,
2018, compared with $5.4 million for the year ended December 31,
2017. The increase between years was primarily attributable to a
$310,000 increase in bank card interchange fees, a $232,000
increase in other non-interest income, and a $102,000 increase in
service charges on deposit accounts, partially offset by a
reduction in the gain on sales of securities of $294,000.
The $232,000 net increase in other non-interest income for 2018
includes a $150,000 third quarter gain on sale of the Bank’s
secondary market residential mortgage servicing rights portfolio,
as well as a $632,000 fourth quarter gain on sale of a subdivided
lot at the Company’s headquarters, partially offset by a $392,000
fourth quarter impairment charge associated with the transfer of
the Bank’s data processing center to Premises Held for Sale.
In December 2018, the Bank completed a core system conversion,
which Management believes will provide opportunities for work flow
efficiencies and improvements in customer experience. In connection
with the completion of the core systems conversion, Management
approved the closure of its central data processing facility.
Support services personnel will be relocated from the bank-owned
data processing facility to other nearby facilities in 2019. In
December 2018, the data processing facility was transferred to
Premises Held For Sale at fair value, as determined by an
independent third party appraisal, less estimated cost to sell. The
transfer to held for sale resulted in the $392,000 impairment
charge noted above, which is included in other non-interest income.
Upon sale of the facility, Management expects to realize annual
occupancy expense savings of approximately $200,000.
Non-interest income increased $30,000 to $1.7 million for the
fourth quarter of 2018, compared with $1.6 million for the fourth
quarter of 2017. The increase was due primarily to a $204,000
increase in other non-interest income as described in the paragraph
above and a $170,000 increase in bank card interchange fees,
partially offset by a reduction in net gain on sale of securities
of $293,000 as compared to 2017.
Non-interest expense decreased $1.6 million to $29.1 million for
the year ended December 31, 2018, compared with $30.8 million for
the year ended December 31, 2017. The decrease in non-interest
expense was due primarily to a $1.1 million decrease in OREO
expense and a $855,000 decrease in FDIC insurance attributable to
the Bank’s improved risk profile, partially offset by a $399,000
increase in salaries and employee benefits.
Non-interest expense decreased $1.8 million to $7.3 million for
the fourth quarter of 2018, compared with $9.1 million for the
fourth quarter of 2017. The decrease from the fourth quarter of
2017 was primarily due to a decrease in OREO expense of $1.6
million as well as a decrease in FDIC insurance expense of $239,000
attributable to the Bank’s improved risk profile. This decrease was
partially offset by an increase in salaries and employee benefits
of $266,000.
Capital – At December 31, 2018, the Bank’s Tier 1
leverage ratio was 9.60%, compared with 8.70% at December 31, 2017,
and its Total risk-based capital ratio was 12.88% at December 31,
2018, compared with 11.61% at December 31, 2017. At December 31,
2018, the Company’s Tier I leverage ratio was 9.00%, compared with
7.11% at December 31, 2017, and its Total risk-based capital ratio
was 12.23%, compared with 10.55% at December 31, 2017. At December
31, 2018, the Company’s Common equity Tier I risk-based capital
ratio was 9.44%, compared with 6.92% at December 31, 2017.
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, 2017.
Additional Information
Unaudited supplemental financial information for the quarter and
year ending December 31, 2018, 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 12/31/18 12/31/17 12/31/18 12/31/17
Income Statement Data Interest income $ 11,741 $ 9,717 $
43,461 $ 37,522 Interest expense 3,037 1,716
9,790 6,405 Net interest income 8,704
8,001 33,671 31,117 Provision (negative provision) for loan losses
— (800 ) (500 ) (800 ) Net interest
income after provision 8,704 8,801 34,171 31,917 Service
charges on deposit accounts 588 636 2,355 2,253 Bank card
interchange fees 573 403 1,831 1,521 Bank owned life insurance
income 100 103 437 412 Gain (loss) on sales and calls of
securities, net — 293 (6 ) 288 Other 411 207
1,162 930 Non-interest income 1,672
1,642 5,779 5,404 Salaries & employee benefits 3,923
3,657 15,489 15,090 Occupancy and equipment 915 919 3,586 3,420
Professional fees 201 202 814 978 Marketing expense 247 218 1,114
1,098 FDIC insurance 118 357 557 1,412 Data processing expense 280
325 1,192 1,256 State franchise and deposit tax 272 281 1,118 956
Deposit account related expense 170 250 823 896 Other real estate
owned expense 278 1,881 868 1,973 Litigation and loan collection
expense 83 58 245 179 Other 835 924
3,320 3,509 Non-interest expense 7,322 9,072
29,126 30,767 Income before income taxes 3,054 1,371 10,824
6,554 Income tax expense (benefit) 614 (31,899 )
2,030 (31,899 ) Net income 2,440
33,270 8,794 38,453 Weighted
average shares – Basic 7,457,206 6,259,864 7,159,723 6,249,059
Weighted average shares – Diluted 7,457,206 6,259,864 7,159,723
6,249,059 Basic earnings per common share $ 0.33 $ 5.31 $
1.23 $ 6.15 Diluted earnings per common share $ 0.33 $ 5.31 $ 1.23
$ 6.15 Cash dividends declared per common share $ 0.00 $ 0.00 $
0.00 $ 0.00
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 12/31/18 12/31/17 12/31/18 12/31/17
Average Balance Sheet Data Assets $ 1,066,216 $ 960,269 $
1,026,310 $ 947,961 Loans 765,542 695,646 743,352 667,474 Earning
assets 1,001,093 916,561 957,454 904,069 Deposits 895,377 862,625
860,825 864,278 Long-term debt and advances 75,339 50,335 75,154
38,057 Interest bearing liabilities 824,300 774,507 799,032 773,247
Stockholders’ equity 89,836 41,397 84,860 37,851
Performance Ratios Return on average assets 0.91 % 13.75 %
0.86 % 4.06 % Return on average equity 10.78 318.85 10.36 101.59
Yield on average earning assets (tax
equivalent)
4.66 4.24 4.55 4.18 Cost of interest bearing liabilities 1.46 0.88
1.23 0.83 Net interest margin (tax equivalent) 3.46 3.50 3.53 3.48
Efficiency ratio 70.57 97.03 73.82 84.91
Loan Charge-off
Data Loans charged-off $ (133 ) $ (226 ) $ (616 ) $ (901 )
Recoveries 379 201 1,794
936 Net recoveries (charge-offs) $ 246 $ (25 )
$ 1,178 $ 35
Nonaccrual Loan Activity
Nonaccrual loans at beginning of period $ 2,692 $ 5,769 $ 5,457 $
9,216 Net principal pay-downs (1,124 ) (488 ) (3,594 ) (4,952 )
Charge-offs (28 ) (137 ) (293 ) (665 ) Loans foreclosed and
transferred to OREO — — (730 ) (270 ) Loans returned to accrual
status — — (77 ) (199 ) Loans placed on nonaccrual during the
period 451 313 1,228
2,327 Nonaccrual loans at end of period $ 1,991
$ 5,457 $ 1,991 $ 5,457
Troubled Debt Restructurings (TDRs) Accruing $ 910 $ 1,217 $
910 $ 1,217 Nonaccrual — 1,829 —
1,829 Total $ 910 $ 3,046 $ 910
$ 3,046
Other Real Estate Owned (OREO)
Activity OREO at beginning of period $ 3,750 $ 6,330 $ 4,409 $
6,821 Real estate acquired — — 730 270 Valuation adjustment
write-downs (265 ) (1,865 ) (850 ) (1,963 ) Proceeds from sales of
properties — (55 ) (876 ) (793 ) Gain (loss) on sales, net —
(1 ) 72 74 OREO at end of
period $ 3,485 $ 4,409 $ 3,485 $ 4,409
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 12/31/18 9/30/18
6/30/18 3/31/18 12/31/17
Income Statement Data
Interest income $ 11,741 $ 11,120 $ 10,585 $ 10,015 $ 9,717
Interest expense 3,037 2,708 2,211
1,834 1,716 Net interest income 8,704
8,412 8,374 8,181 8,001 Provision (negative provision) for loan
losses — (350 ) (150 ) — (800 )
Net interest income after provision 8,704 8,762 8,524 8,181 8,801
Service charges on deposit accounts 588 608 591 568 636 Bank
card interchange fees 573 411 446 401 403 Bank owned life insurance
income 100 100 138 99 103 Gain (loss) on sales and calls of
securities, net — — (6 ) — 293 Other 411 390
178 183 207 Non-interest income
1,672 1,509 1,347 1,251 1,642 Salaries & employee
benefits 3,923 3,893 3,885 3,788 3,657 Occupancy and equipment 915
896 880 895 919 Professional fees 201 186 222 205 202 Marketing
expense 247 259 308 300 218 FDIC insurance 118 118 139 182 357 Data
processing expense 280 281 307 324 325 State franchise and deposit
tax 272 282 282 282 281 Deposit account related expense 170 213 221
219 250 Other real estate owned expense 278 271 237 82 1,881
Litigation and loan collection expense 83 61 48 53 58 Other
835 770 876 839 924
Non-interest expense 7,322 7,230 7,405 7,169 9,072
Income before income taxes 3,054 3,041 2,466 2,263 1,371 Income tax
expense (benefit) 614 604 483
329 (31,899 ) Net income $ 2,440 $ 2,437 $
1,983 $ 1,934 $ 33,270 Weighted average shares
– Basic 7,457,206 7,455,316 7,424,742 6,285,420 6,259,864 Weighted
average shares – Diluted 7,457,206 7,455,316 7,424,742 6,285,420
6,259,864 Basic earnings per common share $ 0.33 $ 0.33 $
0.27 $ 0.31 $ 5.31 Diluted earnings per common share $ 0.33 $ 0.33
$ 0.27 $ 0.31 $ 5.31 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 12/31/18 9/30/18 6/30/18
3/31/18 12/31/17
Assets
Loans $ 765,244 $ 757,051 $ 749,234 $ 729,432 $ 712,115 Allowance
for loan losses (8,880 ) (8,634 ) (8,580 )
(8,526 ) (8,202 ) Net loans 756,364 748,417 740,654
720,906 703,913 Loans held for sale — — — — 70 Securities available
for sale 201,192 184,870 178,896 160,812 152,720 Federal funds sold
& interest bearing deposits 28,398 31,761 33,534 30,073 25,966
Cash and due from financial institutions 6,963 5,770 7,013 7,610
8,137 Premises and equipment 14,655 17,027 16,813 16,789 16,789
Premises held for sale 1,050 — — — — Bank owned life insurance
15,646 15,551 15,456 15,323 15,229 FHLB Stock 7,233 7,233 7,323
7,323 7,323 Other real estate owned 3,485 3,750 4,510 4,385 4,409
Deferred taxes, net 29,282 30,230 30,623 30,997 31,313 Accrued
interest receivable and other assets 5,424
5,882 5,699 5,886 4,932
Total Assets $ 1,069,692 $ 1,050,491 $
1,040,521 $ 1,000,104 $ 970,801
Liabilities and Equity Certificates of deposit $ 450,886 $
457,239 $ 435,454 $ 431,921 $ 424,235 Interest checking 94,269
87,407 88,955 92,048 99,383 Money market 171,924 159,499 150,048
150,974 151,388 Savings 34,534 34,320
35,220 35,984 34,632
Total interest bearing deposits 751,613 738,465 709,677 710,927
709,638 Demand deposits 142,618 135,561
136,553 135,984 137,386
Total deposits 894,231 874,026 846,230 846,911 847,024 FHLB
advances 46,549 51,591 71,630 26,752 11,797 Junior subordinated
debentures 21,000 21,000 21,000 23,025 23,250 Senior debt 10,000
10,000 10,000 10,000 10,000 Accrued interest payable and other
liabilities 5,815 5,662 5,262
5,186 6,057 Total liabilities
977,595 962,279 954,122 911,874 898,128 Preferred
stockholders’ equity — — — 2,771 2,771 Common stockholders’ equity
92,097 88,212 86,399
85,459 69,902 Total stockholders’
equity 92,097 88,212 86,399
88,230 72,673
Total
Liabilities and Stockholders’ Equity $ 1,069,692 $
1,050,491 $ 1,040,521 $ 1,000,104 $ 970,801
Ending shares outstanding 7,462,720 7,456,590
7,454,993 7,409,864 6,259,864
Book value per common share $
12.34 $ 11.83 $ 11.59 $ 11.53 $ 11.17
Tangible book value per
common share 12.34 11.83 11.59 11.53 11.17
LIMESTONE BANCORP, INC. Unaudited Financial
Information
(in thousands, except share and per share
data)
As of 12/31/18 9/30/18
6/30/18 3/31/18 12/31/17
Quarterly Performance Ratios Return on average assets 0.91 %
0.93 % 0.79 % 0.79 % 13.75 % Return on average equity 10.78 11.05
8.97 10.71 318.85 Yield on average earning assets (tax equivalent)
4.66 4.56 4.51 4.45 4.24 Cost of interest bearing liabilities 1.46
1.32 1.13 0.96 0.88 Net interest margin (tax equivalent) 3.46 3.45
3.57 3.63 3.50 Efficiency ratio 70.57 72.88 76.13 76.01 97.03
Asset Quality Data Nonaccrual loans $ 1,991 $ 2,692 $
3,170 $ 4,370 $ 5,457 Troubled debt restructurings on accrual 910
910 916 922 1,217 Loan 90 days or more past due still on accrual
— — — —
1 Total non-performing loans 2,901 3,602 4,086 5,292
6,675 Real estate acquired through foreclosures 3,485 3,750 4,510
4,385 4,409 Other repossessed assets — —
— — — Total
non-performing assets $ 6,386 $ 7,352 $ 8,596
$ 9,677 $ 11,084 Non-performing loans to total
loans 0.38 % 0.48 % 0.55 % 0.73 % 0.94 % Non-performing assets to
total assets 0.60 0.70 0.83 0.97 1.14 Allowance for loan losses to
non-performing loans 306.10 239.70 209.99 161.11 122.88
Allowance for loan losses to total loans 1.16 % 1.14 % 1.15 % 1.17
% 1.15 %
Loans by Risk Category Pass $ 745,604 $
736,193 $ 720,446 $ 695,507 $ 673,033 Watch 13,164 12,314 19,091
17,938 25,715 Special Mention 113 114 115 162 164 Substandard 6,363
8,430 9,582 15,825 13,203 Doubtful — —
— — —
Total $
765,244 $ 757,051 $ 749,234 $ 729,432 $ 712,115
Loans by
Past Due Status Past due loans: 30 – 59 days $ 1,593 $ 1,492 $
1,134 $ 6,402 $ 1,478 60 – 89 days 331 929 538 472 171 90 days or
more — — — — 1 Nonaccrual loans 1,991 2,692
3,170 4,370 5,457
Total past due and nonaccrual loans $ 3,915 $ 5,113 $ 4,842
$ 11,244 $ 7,107
Risk-based Capital Ratios - Company
Tier I leverage ratio 9.00 % 8.91 % 8.70 % 9.18 % 7.11 % Common
equity Tier I risk-based capital ratio 9.44 9.21 8.92 8.98 6.92
Tier I risk-based capital ratio 11.08 10.83 10.41 11.03 8.44 Total
risk-based capital ratio 12.23 12.07 11.76 12.56 10.55
Risk-based Capital Ratios – Limestone Bank Tier I leverage
ratio 9.60 % 9.51 % 9.37 % 9.31 % 8.70 % Common equity Tier I
risk-based capital ratio 11.83 11.56 11.23 11.18 10.35 Tier I
risk-based capital ratio 11.83 11.56 11.23 11.18 10.35 Total
risk-based capital ratio 12.88 12.60 12.26 12.43 11.61
FTE employees 214 215 217 214 217
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 12/31/18
9/30/18 6/30/18 3/31/18
12/31/17
Efficiency Ratio (in thousands) Net interest
income $ 8,704 $ 8,412 $ 8,374 $ 8,181 $ 8,001 Non-interest income
1,672 1,509 1,347 1,251 1,642 Less: Net gain (loss) on securities
— — (6 ) —
293 Revenue used for efficiency ratio 10,376
9,921 9,727 9,432
9,350 Non-interest expense 7,322 7,230 7,405 7,169 9,072
Efficiency ratio 70.57 % 72.88 % 76.13 % 76.01 % 97.03 %
Twelve Months Ended 12/31/18
12/31/17
Efficiency Ratio
(in thousands) Net interest income $ 33,671 $ 31,117
Non-interest income 5,779 5,404 Less: Net gain (loss) on securities
(6 ) 288 Revenue used for efficiency ratio
39,456 36,233 Non-interest expense
29,126 30,767 Efficiency ratio 73.82 % 84.91 %
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version on businesswire.com: https://www.businesswire.com/news/home/20190123005664/en/
John T. TaylorChief Executive Officer(502) 499-4800
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