Limestone Bancorp, Inc. (NASDAQ: LMST) (“the Company”), parent
company of Limestone Bank (“the Bank”), today reported unaudited
results for the second quarter of 2019. Net income available to
common shareholders for the second quarter of 2019 was $3.6
million, or $0.49 per basic and diluted common share, compared with
$2.0 million, or $0.27 per basic and diluted share, for the second
quarter of 2018. Net income for the six months ended June 30, 2019,
was $6.5 million, or $0.87 per diluted common share, compared with
net income of $3.9 million, or $0.57 per diluted share, for the six
months ended June 30, 2018.
Net income before taxes was $3.0 million and $6.0 million for
the second quarter of 2019 and for the first six months of 2019,
respectively, compared to $2.5 million and $4.7 million for the
second quarter and first six months of 2018, respectively. Income
tax benefit was $611,000 and $488,000 for the second quarter of
2019 and for the first six months of 2019, respectively, compared
to income tax expense of $483,000 and $812,000 for the second
quarter of 2018 and for the first six months of 2018,
respectively.
Income Taxes – During the first quarter of 2019, the
Company benefitted $341,000, or $0.05 per basic and diluted share,
from the establishment of a net deferred tax asset related to a
change in Kentucky tax law enacted during the quarter. The new law
eliminates the Kentucky bank franchise tax, which is assessed at a
rate of 1.1% of average capital, and implements a state income tax
for the Bank at a statutory rate of 5%. The new Kentucky income tax
will go into effect on January 1, 2021.
In addition, the Company had state net operating loss
carryforwards (“NOLs”) of $30.2 million, which were previously
subject to a full valuation allowance and will begin to expire in
2025. In April 2019, tax legislation was enacted which allowed for
certain Kentucky NOLs to be utilized in a combined filing return.
Therefore, the Company will begin filing a Kentucky combined filing
in 2021, and as a result, a state NOL tax benefit, net of federal
impact, of $1.2 million, or approximately $0.16 per basic and
diluted share, was recognized in the second quarter of 2019.
Net Interest Income – Net interest income decreased to
$8.8 million for the second quarter of 2019, compared with $9.0
million in the first quarter of 2019 and increased from $8.4
million in the second quarter of 2018. Average loans increased to
$793.5 million for the second quarter of 2019, compared to $766.5
million for the first quarter of 2019 and $734.7 million for the
second quarter of 2018. Net interest margin decreased to 3.42% in
the second quarter of 2019, compared with 3.61% for the first
quarter of 2019 and 3.57% for the second quarter of 2018.
The yield on earning assets decreased to 4.81% for the second
quarter of 2019, compared to 4.90% for the first quarter of 2019
and increased from 4.51% in the second quarter of 2018. Loan fee
income can meaningfully impact net interest income, loan yields,
and net interest margin. The amount of loan fee income included in
total interest income was $167,000, $546,000, and $92,000 for the
quarters ended June 30, 2019, March 31, 2019, and June 30, 2018,
respectively. This represents six basis points, 22 basis points,
and four basis points of yield on earning assets and net interest
margin for the quarters ended June 30, 2019, March 31, 2019, and
June 30, 2018, respectively. The cost of interest bearing
liabilities was 1.68% for the second quarter of 2019, compared to
1.57% for the first quarter of 2019 and 0.42% for the second
quarter of 2018.
Net interest income increased to $17.8 million for the first six
months of 2019, compared with $16.6 million in the first six months
of 2018. Average loans increased to $780.0 million for the first
six months of 2019, compared to $729.5 million for the first six
months of 2018. Net interest margin decreased to 3.51% in the first
six months of 2019, compared with 3.60% for the first six months of
2018.
The yield on earning assets increased to 4.86% for the first six
months of 2019, compared to 4.48% for the first six months of 2018.
The amount of loan fee income included in total interest income was
$713,000 and $189,000 for the six months ended June 30, 2019 and
June 30, 2018, respectively. This represents 14 basis points and
four basis points of yield on earning assets and net interest
margin for the six months ended June 30, 2019 and 2018,
respectively. The cost of interest bearing liabilities was 1.62%
for the first six months of 2019, compared to 1.05% in the first
six months of 2018.
Provision and Allowance for Loan Losses – The allowance
for loan losses to total loans was 1.10% at June 30, 2019, compared
to 1.10% at March 31, 2019, and 1.15% at June 30, 2018. Net loan
recoveries were $146,000 and net loan charge-offs of $48,000,
respectively, for the three and six months ended June 30, 2019,
compared to net loan recoveries of $204,000 and $528,000,
respectively, for the three and six months ended June 30, 2018.
Based upon historically strong trends in asset quality and
management’s assessment of risk in the loan portfolio, no provision
for loan losses was recorded for the three and six months ended
June 30, 2019, compared to a negative provision for loan loss of
$150,000 recorded for the three and six months ended June 30,
2018.
Non-performing Assets – Non-performing assets, which
include loans on nonaccrual, accruing troubled debt restructurings,
loans past due 90 days and still accruing, and other real estate
owned (“OREO”), remained unchanged at $6.2 million, or 0.55% of
total assets, at June 30, 2019, compared with $6.2 million, or
0.57% of total assets, at March 31, 2019, and decreased compared to
$8.6 million, or 0.83% of total assets, at June 30, 2018.
Non-performing loans increased to $2.9 million, or 0.37% of total
loans, at June 30, 2019, compared with $2.8 million, or 0.36% of
total loans, at March 31, 2019, and decreased from $4.1 million, or
0.55% of total loans, at June 30, 2018.
OREO decreased to $3.2 million at June 30, 2019, compared with
$3.3 million at March 31, 2019, and $4.5 million at June 30, 2018.
Fair value write-downs arising from changing marketing strategies
totaled $110,000 and $260,000 for the three and six months ended
June 30, 2019, respectively, compared to $265,000 and $325,000 for
the three and six months ended June 30, 2018, respectively.
Non-interest Income and Expense – Non-interest income for
the second quarter of 2019 increased $99,000 to $1.4 million,
compared with $1.3 million for the second quarter of 2018. The
increase from the second quarter of 2018 was primarily due to an
increase in bank card interchange fees of $150,000. Non-interest
expense decreased $181,000, or 2.4% to $7.2 million for the second
quarter of 2019, compared with $7.4 million for the second quarter
of 2018. The decrease from the second quarter of 2018 was primarily
due to a decrease of $96,000 in marketing expense and $95,000 in
OREO expense.
Non-interest income for the first six months of 2019 increased
$132,000 to $2.7 million, compared with $2.6 million for the first
six months of 2018. The increase was primarily due to an increase
in bank card interchange fees of $257,000 partially offset by a
decrease in service charges on deposit accounts of $92,000.
Non-interest expense decreased $69,000, or 0.5% to $14.5 million
for the first six months of 2019, compared with $14.6 million for
the first six months of 2018. The decrease was primarily due to
decreases of $169,000 in marketing expense and $110,000 in FDIC
insurance expense partially offset by an increase in salaries and
employee benefits of $157,000, or 2.0%, and an increase in deposit
account related expense of $151,000.
Capital – At June 30, 2019, the Bank’s Tier 1 leverage
ratio was 10.01%, compared with 9.88% at March 31, 2019, and its
Total risk-based capital ratio was 13.26% at June 30, 2019,
compared with 13.01% at March 31, 2019. At June 30, 2019, the
Company’s Tier 1 leverage ratio was 9.46%, compared with 9.30% at
March 31, 2019, and its Total risk-based capital ratio was 12.56%,
compared with 12.32% at March 31, 2019. At June 30, 2019, the
Company’s Common equity Tier 1 risk-based capital ratio was 9.82%,
compared with 9.57% at March 31, 2019.
About Limestone Bancorp, Inc. Limestone Bancorp, Inc.
(NASDAQ: LMST) is a Louisville, Kentucky-based bank holding company
which operates banking centers in 12 counties through its
wholly-owned subsidiary Limestone Bank. The Bank’s markets include
metropolitan Louisville in Jefferson County and the surrounding
counties of Henry and Bullitt, and extend south along the
Interstate 65 corridor. The Bank serves southern and south central
Kentucky from banking centers in Butler, Green, Hart, Edmonson,
Barren, Warren, Ohio and Daviess counties. The Bank also has a
banking center in Lexington, Kentucky, the second largest city in
the state. Limestone Bank is a traditional community bank with a
wide range of personal and business banking products and
services.
Forward-Looking Statements Statements in this press
release relating to Limestone Bancorp’s plans, objectives,
expectations or future performance are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. The words “believe,” “may,” “should,” “anticipate,”
“estimate,” “expect,” “intend,” “objective,” “possible,” “seek,”
“plan,” “strive” or similar words, or negatives of these words,
identify forward-looking statements that involve risks and
uncertainties. Although the Company's management believes the
assumptions underlying the forward-looking statements contained
herein are reasonable, any of these assumptions could be
inaccurate. Therefore, there can be no assurance the
forward-looking statements included herein will prove to be
accurate. Factors that could cause actual results to differ from
those discussed in forward-looking statements include, but are not
limited to: economic conditions both generally and more
specifically in the markets in which the Company and its
subsidiaries operate; competition for the Company's customers from
other providers of financial services; government legislation and
regulation, which change from time to time and over which the
Company has no control; changes in interest rates; material
unforeseen changes in liquidity, results of operations, or
financial condition of the Company's customers; and other risks
detailed in the Company's filings with the Securities and Exchange
Commission, all of which are difficult to predict and many of which
are beyond the control of the Company. See Risk Factors outlined in
the Company's Form 10-K for the year ended December 31, 2018.
Additional Information Unaudited supplemental financial
information for the second quarter ending June 30, 2019,
follows.
LIMESTONE BANCORP,
INC.
Unaudited Financial
Information
(in thousands, except share and
per share data)
Three
Three
Six
Six
Months
Months
Months
Months
Ended
Ended
Ended
Ended
6/30/19
6/30/18
6/30/19
6/30/18
Income Statement Data
Interest income
$
12,376
$
10,585
$
24,562
$
20,600
Interest expense
3,576
2,211
6,803
4,045
Net interest income
8,800
8,374
17,759
16,555
Provision (negative provision) for loan
losses
—
(150
)
—
(150
)
Net interest income after provision
8,800
8,524
17,759
16,705
Service charges on deposit accounts
571
591
1,067
1,159
Bank card interchange fees
596
446
1,104
847
Bank owned life insurance income
118
138
217
237
Gain (loss) on sales and calls of
securities, net
(5
)
(6
)
(5
)
(6
)
Other
166
178
347
361
Non-interest income
1,446
1,347
2,730
2,598
Salaries & employee benefits
3,915
3,885
7,830
7,673
Occupancy and equipment
854
880
1,752
1,775
Professional fees
179
222
344
427
Marketing expense
212
308
439
608
FDIC insurance
103
139
211
321
Data processing expense
315
307
628
631
State franchise and deposit tax
315
282
630
564
Deposit account related expense
310
221
591
440
Other real estate owned expense
142
237
308
319
Litigation and loan collection expense
34
48
80
101
Other
845
876
1,692
1,715
Non-interest expense
7,224
7,405
14,505
14,574
Income before income taxes
3,022
2,466
5,984
4,729
Income tax expense (benefit)
(611
)
483
(488
)
812
Net income
$
3,633
$
1,983
$
6,472
$
3,917
Weighted average shares – Basic
7,459,631
7,424,742
7,464,743
6,858,228
Weighted average shares – Diluted
7,459,631
7,424,742
7,464,743
6,858,228
Basic earnings per common share
$
0.49
$
0.27
$
0.87
$
0.57
Diluted earnings per common share
$
0.49
$
0.27
$
0.87
$
0.57
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
Three
Three
Three
Months
Months
Months
Months
Months
Ended
Ended
Ended
Ended
Ended
6/30/19
3/31/19
12/31/18
9/30/18
6/30/18
Income Statement Data
Interest income
$
12,376
$
12,186
$
11,741
$
11,120
$
10,585
Interest expense
3,576
3,227
3,037
2,708
2,211
Net interest income
8,800
8,959
8,704
8,412
8,374
Provision (negative provision) for loan
losses
—
—
—
(350
)
(150
)
Net interest income after provision
8,800
8,959
8,704
8,762
8,524
Service charges on deposit accounts
571
496
588
608
591
Bank card interchange fees
596
508
573
411
446
Bank owned life insurance income
118
99
100
100
138
Gain (loss) on sales and calls of
securities, net
(5
)
—
—
—
(6
)
Other
166
181
411
390
178
Non-interest income
1,446
1,284
1,672
1,509
1,347
Salaries & employee benefits
3,915
3,915
3,923
3,893
3,885
Occupancy and equipment
854
898
915
896
880
Professional fees
179
165
201
186
222
Marketing expense
212
227
247
259
308
FDIC insurance
103
108
118
118
139
Data processing expense
315
313
280
281
307
State franchise and deposit tax
315
315
272
282
282
Deposit account related expense
310
281
170
213
221
Other real estate owned expense
142
166
278
271
237
Litigation and loan collection expense
34
46
83
61
48
Other
845
847
835
770
876
Non-interest expense
7,224
7,281
7,322
7,230
7,405
Income before income taxes
3,022
2,962
3,054
3,041
2,466
Income tax expense (benefit)
(611
)
123
614
604
483
Net income
$
3,633
$
2,839
$
2,440
$
2,437
$
1,983
Weighted average shares – Basic
7,459,631
7,469,912
7,457,206
7,455,316
7,424,742
Weighted average shares – Diluted
7,459,631
7,469,912
7,457,206
7,455,316
7,424,742
Basic earnings per common share
$
0.49
$
0.38
$
0.33
$
0.33
$
0.27
Diluted earnings per common share
$
0.49
$
0.38
$
0.33
$
0.33
$
0.27
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
6/30/19
3/31/19
12/31/18
9/30/18
6/30/18
Assets
Loans
$
803,114
$
786,585
$
765,244
$
757,051
$
749,234
Allowance for loan losses
(8,832
)
(8,686
)
(8,880
)
(8,634
)
(8,580
)
Net loans
794,282
777,899
756,364
748,417
740,654
Securities available for sale
208,614
206,411
201,192
184,870
178,896
Federal funds sold & interest bearing
deposits
40,755
24,029
28,398
31,761
33,534
Cash and due from financial
institutions
6,860
6,461
6,963
5,770
7,013
Premises and equipment
14,827
14,926
14,655
17,027
16,813
Premises held for sale
995
1,050
1,050
—
—
Bank owned life insurance
15,853
15,739
15,646
15,551
15,456
FHLB Stock
6,693
6,813
7,233
7,233
7,323
Other real estate owned
3,225
3,335
3,485
3,750
4,510
Deferred taxes, net
28,708
28,568
29,282
30,230
30,623
Accrued interest receivable and other
assets
5,976
6,092
5,424
5,882
5,699
Total Assets
$
1,126,788
$
1,091,323
$
1,069,692
$
1,050,491
$
1,040,521
Liabilities and Equity
Certificates of deposit
$
505,263
$
465,369
$
450,886
$
457,239
$
435,454
Interest checking
95,296
96,537
94,269
87,407
88,955
Money market
162,917
166,430
171,924
159,499
150,048
Savings
33,553
34,066
34,534
34,320
35,220
Total interest bearing deposits
797,029
762,402
751,613
738,465
709,677
Demand deposits
141,448
146,440
142,618
135,561
136,553
Total deposits
938,477
908,842
894,231
874,026
846,230
FHLB advances
51,470
51,511
46,549
51,591
71,630
Junior subordinated debentures
21,000
21,000
21,000
21,000
21,000
Senior debt
10,000
10,000
10,000
10,000
10,000
Accrued interest payable and other
liabilities
4,419
3,651
5,815
5,662
5,262
Total liabilities
1,025,366
995,004
977,595
962,279
954,122
Total common stockholders’ equity
101,422
96,319
92,097
88,212
86,399
Total Liabilities and Stockholders’
Equity
$
1,126,788
$
1,091,323
$
1,069,692
$
1,050,491
$
1,040,521
Ending shares outstanding
7,457,832
7,460,614
7,462,720
7,456,590
7,454,993
Book value per common share
$
13.60
$
12.91
$
12.34
$
11.83
$
11.59
Tangible book value per common
share
13.60
12.91
12.34
11.83
11.59
LIMESTONE BANCORP,
INC.
Unaudited Financial
Information
(in thousands, except share and
per share data)
As of
6/30/19
3/31/19
12/31/18
9/30/18
6/30/18
Average Balance Sheet Data
Assets
$
1,100,459
$
1,075,553
$
1,066,216
$
1,037,636
$
1,013,008
Loans
793,460
766,505
765,542
748,444
734,709
Earning assets
1,033,581
1,009,948
1,001,093
968,876
943,023
Deposits
926,730
900,829
895,377
869,707
842,757
Long-term debt and advances
71,989
76,524
75,339
74,994
76,209
Interest bearing liabilities
855,100
834,637
824,300
810,917
783,123
Stockholders’ equity
97,730
93,491
89,836
87,486
88,701
Quarterly Performance Ratios
Return on average assets
1.32
%
1.07
%
0.91
%
0.93
%
0.79
%
Return on average equity
14.91
12.32
10.78
11.05
8.97
Yield on average earning assets (tax
equivalent)
4.81
4.90
4.66
4.56
4.51
Cost of interest bearing liabilities
1.68
1.57
1.46
1.32
1.13
Net interest margin (tax equivalent)
3.42
3.61
3.46
3.45
3.57
Efficiency ratio
70.47
71.08
70.57
72.88
76.13
Asset Quality Data
Nonaccrual loans
$
2,028
$
1,921
$
1,991
$
2,692
$
3,170
Troubled debt restructurings on
accrual
905
910
910
910
916
Loan 90 days or more past due still on
accrual
—
—
—
—
—
Total non-performing loans
2,933
2,831
2,901
3,602
4,086
Real estate acquired through
foreclosures
3,225
3,335
3,485
3,750
4,510
Other repossessed assets
—
—
—
—
—
Total non-performing assets
$
6,158
$
6,166
$
6,386
$
7,352
$
8,596
Non-performing loans to total loans
0.37
%
0.36
%
0.38
%
0.48
%
0.55
%
Non-performing assets to total assets
0.55
0.57
0.60
0.70
0.83
Allowance for loan losses to
non-performing loans
301.13
306.82
306.10
239.70
209.99
Allowance for loan losses to total
loans
1.10
%
1.10
%
1.16
%
1.14
%
1.15
%
Loan Charge-off Data
Loans charged off
$
(72
)
$
(278
)
$
(133
)
$
(143
)
$
(293
)
Recoveries
218
84
379
547
497
Net recoveries (charge-offs)
$
146
$
(194
)
$
246
$
404
$
204
Loans by Risk Category
Pass
$
767,662
$
756,493
$
745,604
$
736,193
$
720,446
Watch
22,929
17,412
13,164
12,314
19,091
Special Mention
—
—
113
114
115
Substandard
12,523
12,680
6,363
8,430
9,582
Doubtful
—
—
—
—
—
Total
$
803,114
$
786,585
$
765,244
$
757,051
$
749,234
Loans by Past Due Status
Past due loans:
30 – 59 days
$
858
$
2,001
$
1,593
$
1,492
$
1,134
60 – 89 days
1,015
240
331
929
538
90 days or more
—
—
—
—
—
Nonaccrual loans
2,028
1,921
1,991
2,692
3,170
Total past due and nonaccrual
loans
$
3,901
$
4,162
$
3,915
$
5,113
$
4,842
LIMESTONE BANCORP,
INC.
Unaudited Financial
Information
(in thousands, except share and
per share data)
As of
6/30/19
3/31/19
12/31/18
9/30/18
6/30/18
Risk-based Capital Ratios -
Company
Tier I leverage ratio
9.46
%
9.30
%
9.00
%
8.91
%
8.70
%
Common equity Tier I risk-based capital
ratio
9.82
9.57
9.44
9.21
8.92
Tier I risk-based capital ratio
11.56
11.29
11.08
10.83
10.41
Total risk-based capital ratio
12.56
12.32
12.23
12.07
11.76
Risk-based Capital Ratios – Limestone
Bank
Tier I leverage ratio
10.01
%
9.88
%
9.60
%
9.51
%
9.37
%
Common equity Tier I risk-based capital
ratio
12.26
12.01
11.83
11.56
11.23
Tier I risk-based capital ratio
12.26
12.01
11.83
11.56
11.23
Total risk-based capital ratio
13.26
13.01
12.88
12.60
12.26
FTE employees
219
207
214
215
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
6/30/19
3/31/19
12/31/18
9/30/18
6/30/18
Efficiency Ratio
(in thousands)
Net interest income
$
8,800
$
8,959
$
8,704
$
8,412
$
8,374
Non-interest income
1,446
1,284
1,672
1,509
1,347
Less: Net gain (loss) on securities
(5)
—
—
—
(6)
Revenue used for efficiency ratio
10,251
10,243
10,376
9,921
9,727
Non-interest expense
7,224
7,281
7,322
7,230
7,405
Efficiency ratio
70.47
%
71.08
%
70.57
%
72.88
%
76.13
%
Six Months Ended
6/30/19
6/30/18
Efficiency Ratio
(in thousands)
Net interest income
$
17,759
$
16,555
Non-interest income
2,730
2,598
Less: Net gain (loss) on securities
(5)
(6)
Revenue used for efficiency ratio
20,494
19,159
Non-interest expense
14,505
14,574
Efficiency ratio
70.78
%
76.07
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190724005129/en/
John T. Taylor Chief Executive Officer (502) 499-4800
Limestone Bancorp (NASDAQ:LMST)
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