Item 1.01.
Entry into a Definitive Material Agreement.
Issuance of Subordinated Notes
On July 23, 2019, Limestone Bancorp, Inc. (the “Company”) entered into Subordinated Note Purchase Agreements (collectively, the “Purchase Agreement”) with certain qualified institutional buyers and institutional accredited investors (the
“Purchasers”) pursuant to which the Company sold and issued $17.0 million in aggregate principal amount of its 5.75% Fixed-to-Floating Rate Subordinated Notes due 2029 (the “Notes”). The Notes were offered and sold by the Company to eligible
purchasers in a private offering in reliance on the exemption from the registration requirements of Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Company intends to use the proceeds from the offering to
contribute to Limestone Bank, Inc. (the “Bank”), its wholly-owned subsidiary bank, $10.0 million of Common Equity Tier-1 Capital and to pay down the Company’s senior debt $5.0 million. The remaining proceeds will be used for general corporate
purposes. The fees of the placement agents and other costs of issuance will be paid directly by the Company from cash on hand.
The Notes have a ten-year term and, from and including the date of issuance to but excluding July 31, 2024, will bear interest at a fixed annual rate of 5.75%, payable semi-annually in arrears. From and including
July 31, 2024 to but excluding the maturity date or early redemption date, the interest rate shall reset quarterly to an interest rate per annum equal to the then-current three-month LIBOR (provided, however, that in the event three-month LIBOR is
less than zero, three-month LIBOR shall be deemed to be zero) plus 395 basis points, payable quarterly in arrears. The Notes are redeemable, in whole or in part, on July 31, 2024, on any scheduled interest payment date thereafter and at any time
upon the occurrence of certain events. The Purchase Agreement contains certain customary representations, warranties and covenants made by the Company, on the one hand, and the Purchasers, severally and not jointly, on the other hand.
The Notes were issued under an Indenture, dated July 23, 2019 (the “Indenture”), by and between the Company and Wilmington Trust, National Association, as trustee. The Notes are not subject to any sinking fund and are
not convertible into or exchangeable for any other securities or assets of the Company or any of its subsidiaries. The Notes are not subject to redemption at the option of the holder. The Notes are unsecured, subordinated obligations of the Company
only and are not obligations of, and are not guaranteed by, any subsidiary of the Company. The Notes rank junior in right to payment to the Company’s current and future senior indebtedness. The Notes are intended to qualify as Tier 2 capital for
regulatory capital purposes for the Company.
The form of the Indenture, the form of Note, and the form of the Purchase Agreement are attached as Exhibits 4.1, 4.2, and 10.1, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
The foregoing descriptions of the Indenture, the Note, and the Purchase Agreement are summaries and are qualified in their entirety by reference to the relevant Exhibits to this Current Report on Form 8-K.
Branch Purchase and Assumption Agreement
On July 24, 2019, Limestone Bank, Inc., the wholly-owned subsidiary of Limestone Bancorp, Inc., entered into a Branch Purchase and Assumption 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 (the “Seller”).
Under the terms of the agreement, Limestone Bank will acquire the four branch offices which 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. The transaction
includes an all-in blended deposit premium of approximately 6%. 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.
The form of the Branch Purchase and Assumption Agreement is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the Branch Purchase Agreement is qualified in its entirety
by reference to Exhibit 2.1 to this Current Report on Form 8-K.