Limestone Bank to Acquire 4 Branch Banking Centers
July 25 2019 - 7:45AM
Business Wire
Limestone Bancorp Closes Private Placement
of Subordinated Notes
Makes $10.0 Million Capital Contribution to
Limestone Bank; Reduces Senior Debt $5.0 Million
Limestone Bancorp, Inc. (the “Company”) (NASDAQ: LMST), parent
company of Limestone Bank, announced today that Limestone Bank has
entered into a material definitive agreement to acquire four branch
banking centers located in the Kentucky cities of Elizabethtown,
Frankfort, and Owensboro from Louisville, Kentucky based Republic
Bank and Trust (“Republic Bank”), a subsidiary of Republic Bancorp,
Inc. (NASDAQ: RBCAA). The purchase includes $153 million in
deposits and $112 million in loans. In addition, Limestone will
acquire substantially all the fixed assets of these locations. The
transaction has received approvals from each party’s board of
directors and is expected to close in the fourth quarter of 2019,
subject to regulatory approvals and other customary closing
conditions.
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Limestone Bank Branch Locations
John T. Taylor, president and chief executive officer of
Limestone Bank said, “We are pleased to enter into this agreement
to acquire four banking centers from Republic Bank which are
located in both our existing markets and in nearby contiguous
counties. The acquisition will allow Limestone Bank to increase its
market share and better serve customers in Owensboro through the
addition of two branches, and to grow its geographic footprint with
entry into the Frankfort and Elizabethtown markets. The
Elizabethtown location will allow us to bridge a gap in our
footprint along I-65, and the Frankfort location will provide
another point of access along I-64 between our Louisville and
Lexington facilities.” Taylor continued, “I am also extremely
excited about the talented sales and service staff joining our
organization as a result of this acquisition.”
The transaction includes an all-in blended deposit premium of
approximately 6% which will result in preliminarily estimated
goodwill and core deposit intangibles of approximately $9.3
million. This results in tangible book value dilution of
approximately 9%. The tangible book value earn back period based
upon preliminary earnings estimates for the acquired branches is
expected to be less than three years. The final calculated premium
will be primarily based on the trailing 10-day average amount of
the deposits as of the closing date, as well as the branch location
for the deposits.
Limestone Bancorp also announced today it completed the private
placement issuance of $17.0 million of subordinated notes. Raymond
James served as placement agent in the transaction. The
subordinated notes will bear interest at 5.75% for five years and
then the interest rate will reset quarterly at three-month LIBOR +
395 basis points for the remaining five years. Unless redeemed
earlier, the notes will mature on July 31, 2029. The Company may
redeem the notes at its option beginning July 31, 2024. The
subordinated notes meet the requirements to qualify as Tier 2
capital for the Company.
The Company contributed $10.0 million of the issuance proceeds
to the Bank as Common Equity Tier‑1 Capital and reduced its senior
debt by $5.0 million. The remaining proceeds will be used for
general corporate purposes. Janney Montgomery Scott LLC acted as
financial advisor to Limestone Bancorp and Wyatt, Tarrant &
Combs, LLP acted as the Company’s legal counsel.
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 per
common share 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.
As of
Proforma (1)
6/30/2019
6/30/2019
Tangible Book Value Per Share Common shareholder's equity
$
101,422
$
101,422
Less: Intangible assets
-
(9,300
)
Tangible common equity
$
101,422
$
92,122
Shares outstanding
7,457,832
7,457,832
Tangible book value per common share
$
13.60
$
12.35
Book value per common share
$
13.60
$
13.60
Dilution $
$
1.25
Dilution %
9
%
(1) Proforma effect of preliminarily estimated deposit
intangible and goodwill on tangible common equity.
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. These forward looking
statements include statements related to the expecting timing and
benefits of the proposed branch acquisition and estimates of
deposits, loans and other assets to be acquired. 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.
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John T. Taylor Chief Executive Officer (502) 499-4800
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