Limestone Bancorp, Inc. (NASDAQ: LMST) (“the Company”), parent
company of Limestone Bank (“the Bank”), today reported unaudited
results for the third quarter of 2019. Net income available to
common shareholders for the third quarter of 2019 was $2.3 million,
or $0.31 per basic and diluted common share, compared with $2.4
million, or $0.33 per basic and diluted share, for the third
quarter of 2018. Net income for the nine months ended September 30,
2019, was $8.8 million, or $1.17 per diluted common share, compared
with net income of $6.4 million, or $0.90 per diluted share, for
the nine months ended September 30, 2018.
Net income before taxes was $2.8 million and $8.8 million for
the third quarter of 2019 and for the first nine months of 2019,
respectively, compared to $3.0 million and $7.8 million for the
third quarter and first nine months of 2018, respectively. Income
tax expense was $531,000 and $43,000 for the third quarter of 2019
and for the first nine months of 2019, respectively, compared to
income tax expense of $604,000 and $1.4 million for the third
quarter of 2018 and for the first nine months of 2018,
respectively.
Income Taxes – During the first and second quarters of
2019, the Company benefitted from the enactment of state tax
legislation eliminating the Kentucky bank franchise tax which is
assessed at a rate of 1.1% of average capital. The legislation
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, and the Company will begin filing a Kentucky combined filing
in 2021. The enactment resulted in a tax benefit of $341,000, or
$0.05 per basic and diluted share in the first quarter of 2019 and
$1.2 million, or approximately $0.16 per basic and diluted share in
the second quarter of 2019.
Net Interest Income – On a sequential quarter basis, net
interest income was under pressure as the Federal Reserve lowered
its federal funds target rate by 25 basis points on July 31, 2019
and again by 25 basis points on September 18, 2019. The Company’s
interest rate risk profile is marginally asset sensitive as its
assets generally reprice more quickly than its liabilities over a
twelve-month horizon. In particular, the Fed’s actions served to
lower rates on the short end of the yield curve impacting yields on
fed funds, certain floating rate investment securities, and loans
with variable rate pricing features. As of September 30, 2019, time
deposits comprise $488.1 million of the Company’s liabilities with
$432.3 million, or 89% set to reprice or mature within one
year.
Net interest income decreased to $8.7 million for the third
quarter of 2019, compared with $8.8 million in the second quarter
of 2019 and increased from $8.4 million in the third quarter of
2018. Average loans increased to $800.2 million for the third
quarter of 2019, compared to $793.5 million for the second quarter
of 2019 and $748.4 million for the third quarter of 2018. Net
interest margin decreased to 3.35% in the third quarter of 2019,
compared with 3.42% for the second quarter of 2019 and 3.45% for
the third quarter of 2018.
The yield on earning assets decreased to 4.79% for the third
quarter of 2019, compared to 4.81% for the second quarter of 2019
and increased from 4.56% in the third 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 $247,000, $167,000, and $140,000 for the
quarters ended September 30, 2019, June 30, 2019, and September 30,
2018, respectively. This represents nine basis points, six basis
points, and five basis points of yield on earning assets and net
interest margin for the quarters ended September 30, 2019, June 30,
2019, and September 30, 2018, respectively. The cost of
interest-bearing liabilities was 1.75% for the third quarter of
2019, compared to 1.68% for the second quarter of 2019 and 1.32%
for the third quarter of 2018. Net interest income and the cost of
interest-bearing liabilities for the third quarter of 2019 were
also impacted by the July 23, 2019, subordinated debt issuance of
$17.0 million at a fixed rate of 5.75%. This capital will be
deployed in the pending branch acquisition transaction announced on
July 24, 2019, which is expected to close on or about November 15,
2019.
Net interest income increased to $26.5 million for the first
nine months of 2019, compared with $25.0 million in the first nine
months of 2018. Average loans increased to $786.8 million for the
first nine months of 2019, compared to $735.9 million for the first
nine months of 2018. Net interest margin decreased to 3.46% in the
first nine months of 2019, compared with 3.55% for the first nine
months of 2018.
The yield on earning assets increased to 4.83% for the first
nine months of 2019, compared to 4.51% for the first nine months of
2018. The amount of loan fee income included in total interest
income was $960,000 and $329,000 for the nine months ended
September 30, 2019 and September 30, 2018, respectively. This
represents 13 basis points and five basis points of yield on
earning assets and net interest margin for the nine months ended
September 30, 2019 and 2018, respectively. The cost of
interest-bearing liabilities was 1.67% for the first nine months of
2019, compared to 1.14% in the first nine months of 2018.
Provision and Allowance for Loan Losses – The allowance
for loan losses to total loans was 1.11% at September 30, 2019,
compared to 1.10% at June 30, 2019, and 1.14% at September 30,
2018. Net loan recoveries were $72,000 and $24,000, respectively,
for the three and nine months ended September 30, 2019, compared to
net loan recoveries of $404,000 and $932,000, respectively, for the
three and nine months ended September 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 nine months ended September
30, 2019, compared to a negative provision for loan losses of
$350,000 and $500,000, or $0.04 and $0.06 per dilute share, for the
three and nine months ended September 30, 2018, respectively.
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 $5.8 million, or 0.51% of total
assets, at September 30, 2019, compared with $6.2 million, or 0.55%
of total assets, at June 30, 2019, and decreased compared to $7.4
million, or 0.70% of total assets, at September 30, 2018.
Non-performing loans decreased to $2.6 million, or 0.32% of total
loans, at September 30, 2019, compared with $2.9 million, or 0.37%
of total loans, at June 30, 2019, and decreased from $3.6 million,
or 0.48% of total loans, at September 30, 2018.
OREO remained unchanged at $3.2 million at September 30, 2019,
compared to June 30, 2019, and decreased compared to $3.8 million
at September 30, 2018. There were no fair value write-downs during
the third quarter of 2019 and $260,000 for the nine months ended
September 30, 2019, compared to $260,000 and $585,000 for the three
and nine months ended September 30, 2018, respectively.
Non-interest Income and Expense – Non-interest income for
the first nine months of 2019 increased $157,000 to $4.3 million,
compared with $4.1 million for the first nine months of 2018. The
increase was primarily due to an increase in bank card interchange
fees of $469,000 partially offset by a decrease in other
non-interest income of $150,000 related to the one-time gain on the
sale of the secondary market residential servicing rights
portfolio. Non-interest expense increased $152,000, or 0.7% to
$22.0 million for the first nine months of 2019, compared with
$21.8 million for the first nine months of 2018. The increase was
primarily due to increases of $466,000 in salary and employee
benefits, as the Bank added sales talent and customer facing
associates during the second and third quarters of 2019, and
$238,000 in deposit account related expense partially offset by
decreases in OREO expenses of $257,000, and FDIC insurance expense
of $228,000.
Non-interest income for the third quarter of 2019 increased
$25,000 to $1.5 million, compared with $1.5 million for the third
quarter of 2018. The increase from the third quarter of 2018 was
primarily due to an increase in bank card interchange fees of
$212,000 partially offset by a decrease in other non-interest
income of $150,000 related to a one-time gain on the sale of the
Bank’s fully amortized secondary market residential mortgage
servicing rights portfolio during the third quarter of 2018.
Non-interest expense increased $221,000, or 3.1% to $7.5 million
for the third quarter of 2019, compared with $7.2 million for the
third quarter of 2018. The increase from the third quarter of 2018
was primarily due to an increase of $309,000 in salaries and
employee benefits.
Capital – At September 30, 2019, the Bank’s Tier 1
leverage ratio was 11.25%, compared with 10.01% at June 30, 2019,
and its Total risk-based capital ratio was 14.89% at September 30,
2019, compared with 13.26% at June 30, 2019. At September 30, 2019,
the Bank’s Common equity Tier 1 risk-based capital ratio was
13.87%, compared with 12.26% at June 30, 2019. At September 30,
2019, the Company’s Tier 1 leverage ratio was 9.66%, compared with
9.46% at June 30, 2019, and its Total risk-based capital ratio was
14.84%, compared with 12.56% at June 30, 2019. At September 30,
2019, the Company’s Common equity Tier 1 risk-based capital ratio
was 10.19%, compared with 9.82% at June 30, 2019.
The Company’s capital ratios were positively impacted by the
$17.0 million of subordinated notes issued during the third
quarter, as the subordinated notes meet the requirements to qualify
as Tier 2 capital. The Bank’s capital ratios also benefitted as the
Company contributed $10.0 million of the proceeds to the Bank as
Common Equity Tier 1 Capital.
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 third
quarter ending September 30, 2019, follows.
LIMESTONE BANCORP,
INC.
Unaudited Financial
Information
(in thousands, except share and
per share data)
Three
Three
Nine
Nine
Months
Months
Months
Months
Ended
Ended
Ended
Ended
9/30/19
9/30/18
9/30/19
9/30/18
Income Statement Data
Interest income
$
12,485
$
11,120
$
37,047
$
31,720
Interest expense
3,755
2,708
10,558
6,753
Net interest income
8,730
8,412
26,489
24,967
Provision (negative provision) for loan
losses
—
(350
)
—
(500
)
Net interest income after provision
8,730
8,762
26,489
25,467
Service charges on deposit accounts
633
608
1,700
1,767
Bank card interchange fees
623
411
1,727
1,258
Bank owned life insurance income
97
100
314
337
Gain (loss) on sales and calls of
securities, net
—
—
(5
)
(6
)
Other
181
390
528
751
Non-interest income
1,534
1,509
4,264
4,107
Salaries & employee benefits
4,202
3,893
12,032
11,566
Occupancy and equipment
880
896
2,632
2,671
Professional fees
254
186
598
613
Marketing expense
251
259
690
867
FDIC insurance
—
118
211
439
Data processing expense
315
281
943
912
State franchise and deposit tax
315
282
945
846
Deposit account related expense
300
213
891
653
Other real estate owned expense
25
271
333
590
Litigation and loan collection expense
32
61
112
162
Other
877
770
2,569
2,485
Non-interest expense
7,451
7,230
21,956
21,804
Income before income taxes
2,813
3,041
8,797
7,770
Income tax expense
531
604
43
1,416
Net income
$
2,282
$
2,437
$
8,754
$
6,354
Weighted average shares – Basic
7,471,582
7,455,316
7,467,048
7,059,472
Weighted average shares – Diluted
7,471,582
7,455,316
7,467,048
7,059,472
Basic earnings per common share
$
0.31
$
0.33
$
1.17
$
0.90
Diluted earnings per common share
$
0.31
$
0.33
$
1.17
$
0.90
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
9/30/19
6/30/19
3/31/19
12/31/18
9/30/18
Income Statement Data
Interest income
$
12,485
$
12,376
$
12,186
$
11,741
$
11,120
Interest expense
3,755
3,576
3,227
3,037
2,708
Net interest income
8,730
8,800
8,959
8,704
8,412
Provision (negative provision) for loan
losses
—
—
—
—
(350
)
Net interest income after provision
8,730
8,800
8,959
8,704
8,762
Service charges on deposit accounts
633
571
496
588
608
Bank card interchange fees
623
596
508
573
411
Bank owned life insurance income
97
118
99
100
100
Gain (loss) on sales and calls of
securities, net
—
(5
)
—
—
—
Other
181
166
181
411
390
Non-interest income
1,534
1,446
1,284
1,672
1,509
Salaries & employee benefits
4,202
3,915
3,915
3,923
3,893
Occupancy and equipment
880
854
898
915
896
Professional fees
254
179
165
201
186
Marketing expense
251
212
227
247
259
FDIC insurance
—
103
108
118
118
Data processing expense
315
315
313
280
281
State franchise and deposit tax
315
315
315
272
282
Deposit account related expense
300
310
281
170
213
Other real estate owned expense
25
142
166
278
271
Litigation and loan collection expense
32
34
46
83
61
Other
877
845
847
835
770
Non-interest expense
7,451
7,224
7,281
7,322
7,230
Income before income taxes
2,813
3,022
2,962
3,054
3,041
Income tax expense (benefit)
531
(611
)
123
614
604
Net income
$
2,282
$
3,633
$
2,839
$
2,440
$
2,437
Weighted average shares – Basic
7,471,582
7,459,631
7,469,912
7,457,206
7,455,316
Weighted average shares – Diluted
7,471,582
7,459,631
7,469,912
7,457,206
7,455,316
Basic earnings per common share
$
0.31
$
0.49
$
0.38
$
0.33
$
0.33
Diluted earnings per common share
$
0.31
$
0.49
$
0.38
$
0.33
$
0.33
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
9/30/19
6/30/19
3/31/19
12/31/18
9/30/18
Assets
Loans
$
803,569
$
803,114
$
786,585
$
765,244
$
757,051
Allowance for loan losses
(8,904
)
(8,832
)
(8,686
)
(8,880
)
(8,634
)
Net loans
794,665
794,282
777,899
756,364
748,417
Securities available for sale
203,381
208,614
206,411
201,192
184,870
Federal funds sold & interest bearing
deposits
50,327
40,755
24,029
28,398
31,761
Cash and due from financial
institutions
7,680
6,860
6,461
6,963
5,770
Premises and equipment
15,098
14,827
14,926
14,655
17,027
Premises held for sale
935
995
1,050
1,050
—
Bank owned life insurance
15,946
15,853
15,739
15,646
15,551
FHLB Stock
6,467
6,693
6,813
7,233
7,233
Other real estate owned
3,225
3,225
3,335
3,485
3,750
Deferred taxes, net
28,029
28,708
28,568
29,282
30,230
Accrued interest receivable and other
assets
6,411
5,976
6,092
5,424
5,882
Total Assets
$
1,132,164
$
1,126,788
$
1,091,323
$
1,069,692
$
1,050,491
Liabilities and Equity
Certificates of deposit
$
488,121
$
505,263
$
465,369
$
450,886
$
457,239
Interest checking
95,508
95,296
96,537
94,269
87,407
Money market
153,663
162,917
166,430
171,924
159,499
Savings
34,618
33,553
34,066
34,534
34,320
Total interest bearing deposits
771,910
797,029
762,402
751,613
738,465
Demand deposits
151,524
141,448
146,440
142,618
135,561
Total deposits
923,434
938,477
908,842
894,231
874,026
FHLB advances
56,430
51,470
51,511
46,549
51,591
Junior subordinated debentures
21,000
21,000
21,000
21,000
21,000
Subordinated capital note
17,000
—
—
—
—
Senior debt
5,000
10,000
10,000
10,000
10,000
Accrued interest payable and other
liabilities
4,973
4,419
3,651
5,815
5,662
Total liabilities
1,027,837
1,025,366
995,004
977,595
962,279
Total common stockholders’ equity
104,327
101,422
96,319
92,097
88,212
Total Liabilities and Stockholders’
Equity
$
1,132,164
$
1,126,788
$
1,091,323
$
1,069,692
$
1,050,491
Ending shares outstanding
7,471,582
7,457,832
7,460,614
7,462,720
7,456,590
Book value per common share
$
13.96
$
13.60
$
12.91
$
12.34
$
11.83
Tangible book value per common
share
13.96
13.60
12.91
12.34
11.83
LIMESTONE BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share
data)
As of
9/30/19
6/30/19
3/31/19
12/31/18
9/30/18
Average Balance Sheet Data
Assets
$
1,105,432
$
1,100,459
$
1,075,553
$
1,066,216
$
1,037,636
Loans
800,194
793,460
766,505
765,542
748,444
Earning assets
1,035,522
1,033,581
1,009,948
1,001,093
968,876
Deposits
933,548
926,730
900,829
895,377
869,707
Long-term debt and advances
63,369
71,989
76,524
75,339
74,994
Interest bearing liabilities
852,539
855,100
834,637
824,300
810,917
Stockholders’ equity
103,818
97,730
93,491
89,836
87,486
Quarterly Performance Ratios
Return on average assets
0.82
%
1.32
%
1.07
%
0.91
%
0.93
%
Return on average equity
8.72
14.91
12.32
10.78
11.05
Yield on average earning assets (tax
equivalent)
4.79
4.81
4.90
4.66
4.56
Cost of interest bearing liabilities
1.75
1.68
1.57
1.46
1.32
Net interest margin (tax equivalent)
3.35
3.42
3.61
3.46
3.45
Efficiency ratio
72.59
70.47
71.08
70.57
72.88
Asset Quality Data
Nonaccrual loans
$
2,389
$
2,028
$
1,921
$
1,991
$
2,692
Troubled debt restructurings on
accrual
188
905
910
910
910
Loan 90 days or more past due still on
accrual
—
—
—
—
—
Total non-performing loans
2,577
2,933
2,831
2,901
3,602
Real estate acquired through
foreclosures
3,225
3,225
3,335
3,485
3,750
Other repossessed assets
—
—
—
—
—
Total non-performing assets
$
5,802
$
6,158
$
6,166
$
6,386
$
7,352
Non-performing loans to total loans
0.32
%
0.37
%
0.36
%
0.38
%
0.48
%
Non-performing assets to total assets
0.51
0.55
0.57
0.60
0.70
Allowance for loan losses to
non-performing loans
345.52
301.13
306.82
306.10
239.70
Allowance for loan losses to total
loans
1.11
%
1.10
%
1.10
%
1.16
%
1.14
%
Loan Charge-off Data
Loans charged off
$
(299
)
$
(72
)
$
(278
)
$
(133
)
$
(143
)
Recoveries
371
218
84
379
547
Net recoveries (charge-offs)
$
72
$
146
$
(194
)
$
246
$
404
Loans by Risk Category
Pass
$
754,050
$
767,662
$
756,493
$
745,604
$
736,193
Watch
37,537
22,929
17,412
13,164
12,314
Special Mention
—
—
—
113
114
Substandard
11,982
12,523
12,680
6,363
8,430
Doubtful
—
—
—
—
—
Total
$
803,569
$
803,114
$
786,585
$
765,244
$
757,051
Loans by Past Due Status
Past due loans:
30 – 59 days
$
979
$
858
$
2,001
$
1,593
$
1,492
60 – 89 days
557
1,015
240
331
929
90 days or more
—
—
—
—
—
Nonaccrual loans
2,389
2,028
1,921
1,991
2,692
Total past due and nonaccrual
loans
$
3,925
$
3,901
$
4,162
$
3,915
$
5,113
LIMESTONE BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share
data)
As of
9/30/19
6/30/19
3/31/19
12/31/18
9/30/18
Risk-based Capital Ratios -
Company
Tier I leverage ratio
9.66
%
9.46
%
9.30
%
9.00
%
8.91
%
Common equity Tier I risk-based capital
ratio
10.19
9.82
9.57
9.44
9.21
Tier I risk-based capital ratio
11.88
11.56
11.29
11.08
10.83
Total risk-based capital ratio
14.84
12.56
12.32
12.23
12.07
Risk-based Capital Ratios – Limestone
Bank
Tier I leverage ratio
11.25
%
10.01
%
9.88
%
9.60
%
9.51
%
Common equity Tier I risk-based capital
ratio
13.87
12.26
12.01
11.83
11.56
Tier I risk-based capital ratio
13.87
12.26
12.01
11.83
11.56
Total risk-based capital ratio
14.89
13.26
13.01
12.88
12.60
FTE employees
226
219
207
214
215
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
9/30/19
6/30/19
3/31/19
12/31/18
9/30/18
Efficiency Ratio
(in thousands)
Net interest income
$
8,730
$
8,800
$
8,959
$
8,704
$
8,412
Non-interest income
1,534
1,446
1,284
1,672
1,509
Less: Net gain (loss) on securities
—
(5)
—
—
—
Revenue used for efficiency ratio
10,264
10,251
10,243
10,376
9,921
Non-interest expense
7,451
7,224
7,281
7,322
7,230
Efficiency ratio
72.59
%
70.47
%
71.08
%
70.57
%
72.88
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191023005014/en/
John T. Taylor Chief Executive Officer (502) 499-4800
Limestone Bancorp (NASDAQ:LMST)
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From May 2024 to Jun 2024
Limestone Bancorp (NASDAQ:LMST)
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From Jun 2023 to Jun 2024
