Limestone Bancorp, Inc. (NASDAQ: LMST) (“the Company”), parent
company of Limestone Bank (“the Bank”), today reported unaudited
results for the second quarter of 2020. The federal and state
public health response to the coronavirus pandemic (“COVID-19”)
continues to impact the nation and the economy. Since early March,
the Company and Bank have been impacted alongside consumers and
businesses in our markets. In response to the global pandemic and
the resultant declarations of emergency at the state and national
levels, the Bank has implemented and continues to utilize several
temporary operational changes to serve customers during the
COVID-19 health crisis. Lobby services were initially amended to
appointment only and drive thru, mobile, and online banking were
the Bank’s primary channels of serving customers. The Bank began a
phased re-opening of lobby services in June and also began offering
curbside service in the second quarter. Management remains
committed to ensuring the Bank’s workforce remains healthy and
available to serve customers.
Net income available to common shareholders for the second
quarter of 2020 was $2.0 million, or $0.26 per basic and diluted
common share, compared with $3.6 million, or $0.49 per basic and
diluted share, for the second quarter of 2019. Net income for the
six months ended June 30, 2020, was $3.8 million, or $0.51 per
diluted common share, compared with net income of $6.5 million, or
$0.87 per diluted share, for the six months ended June 30,
2019.
Net income before taxes was $2.4 million and $4.6 million for
the second quarter of 2020 and for the first six months of 2020,
respectively, compared to $3.0 million and $6.0 million for the
second quarter and first six months of 2019, respectively. Income
tax expense was $393,000 and $754,000 for the second quarter of
2020 and for the first six months of 2020, respectively, compared
to income tax benefit of $611,000 and $488,000 for the second
quarter of 2019 and for the first six months of 2019, respectively.
Income tax expense for the second quarter of 2019 and six months
ended June 30, 2019, benefitted $1.2 million, or $0.16 per basic
and diluted common share, and $1.5 million, or $0.21 per basic and
diluted common share, respectively, from the establishment of a net
deferred tax asset related to a change in Kentucky tax law enacted
during the first quarter of 2019. The new law eliminated the
Kentucky bank franchise tax, which is assessed at a rate of 1.1% of
average capital, and implemented 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.
Net Interest Income – The interest rate environment has
been challenging during the first six months of 2020 as the Federal
Reserve, after lowering rates 75 basis points in the latter half of
2019, lowered the federal funds target rate by 50 basis points on
March 6, 2020, and 100 basis points on March 15, 2020.
Net interest income increased to $10.1 million for the second
quarter of 2020, compared to $9.8 million for the first quarter of
2020, and $8.8 million for the second quarter of 2019. Average
loans increased to $978.3 million for the second quarter of 2020,
compared to $949.2 million for the first quarter of 2020, and
$793.5 million for the second quarter of 2019. Average loans for
the first and second quarters of 2020 were positively impacted by
the branch purchase transaction on November 15, 2019, which
included $126.8 million in loans at the time of purchase. Average
loans for the second quarter of 2020 were also positively impacted
by $42.0 million in loan originations under the SBA Paycheck
Protection Program. Net interest margin increased to 3.33% for the
second quarter of 2020, compared with 3.31% for the first quarter
of 2020 and decreased compared with 3.42% for the second quarter of
2019.
The yield on earning assets decreased to 4.21% in the second
quarter of 2020, compared to 4.50% in the first quarter of 2020,
and 4.81% in the second quarter of 2019. The yield on earning
assets for the first and second quarters of 2020 were negatively
impacted by falling interest rates on the Bank’s fed funds, certain
floating rate investment securities, and loans with variable rate
repricing features. 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 $535,000,
$216,000, and $167,000 for the quarters ended June 30, 2020, March
31, 2020, and June 30, 2019, respectively. This represents 17 basis
points, eight basis points, and six basis points of yield on
earning assets and net interest margin for the quarters ended June
30, 2020, March 31, 2020, and June 30, 2019, respectively. Loan fee
income for the second quarter of 2020 included $179,000 in fees
earned on SBA PPP loans.
The cost of interest-bearing liabilities was 1.11% for the
second quarter of 2020, compared to 1.45% in the first quarter of
2020, and 1.68% in the second quarter of 2019. The cost of
interest-bearing liabilities continued to decline based on the
downward repricing of time deposits. Time deposits declined $21.2
million during the second quarter of 2020 as approximately $160.4
million of time deposits with an average rate of 1.78% matured or
repriced at lower interest rates. During the second quarter of
2020, newly originated or renewed time deposits had an average rate
of 0.47% and an average term of approximately 12 months.
Net interest income increased to $19.9 million for the first six
months of 2020, compared with $17.8 million in the first six months
of 2019. Average loans increased to $963.8 million for the first
six months of 2020, compared to $780.1 million for the first six
months of 2019. Average loans were positively impacted from the
branch purchase transaction on November 15, 2019, along with loan
growth during 2019 and 2020, as well as loan originations under the
Paycheck Protection Program. Net interest margin decreased to 3.32%
in the first six months of 2020, compared with 3.51% for the first
six months of 2019.
The yield on earning assets decreased to 4.35% for the first six
months of 2020, compared to 4.86% for the first six months of 2019.
The amount of loan fee income included in total interest income was
$751,000 and $713,000 for the six months ended June 30, 2020 and
June 30, 2019, respectively. This represents 12 basis points and 14
basis points of yield on earning assets and net interest margin for
the six months ended June 30, 2020 and 2019, respectively. The cost
of interest-bearing liabilities was 1.28% for the first six months
of 2020, compared to 1.62% in the first six months of 2019.
As of June 30, 2020, time deposits comprise $446.4 million of
the Company’s liabilities with $199.5 million, or 45%, set to
reprice or mature in 2020 of which, $127.3 million with a current
average rate of 1.41% reprice or mature in the third quarter of
2020. The following table denotes contractual time deposit
maturities and average rates as of June 30, 2020:
Maturity
Quarter
As of June 30, 2020 (in
thousands)
Weighted Average Rate
Q3-2020
127,338
1.41
Q4-2020
72,203
1.16
Q1-2021
84,125
1.18
Q2-2021
79,152
0.65
Q3-2021
17,384
1.03
Q4-2021
9,926
0.75
Thereafter
56,242
1.59
Total time deposits
$
446,370
1.18
%
Investment Securities – The securities portfolio serves
as a source of liquidity and earnings and contributes to the
management of interest rate risk. Investments are made in various
types of liquid assets, including U.S. Treasury obligations and
securities of various federal agencies, obligations of states and
political subdivisions, corporate bonds, and collateralized loan
obligations. The investment portfolio increased by $3.9 million, or
2.0%, to $202.6 million at June 30, 2020, compared with $198.7
million at March 31, 2020, and decreased compared with $208.6
million at June 30, 2019.
The following table sets forth the carrying value of our
securities portfolio at the dates indicated.
June 30, 2020
March 31, 2020
Amortized Cost
Gross Unrealized
Gains
Gross Unrealized
Losses
Fair Value
Amortized Cost
Gross Unrealized
Gains
Gross Unrealized
Losses
Fair Value
(dollars in thousands)
Securities available for sale
U.S. Government and
federal agencies
$
20,302
$
772
$
—
$
21,074
$
20,751
$
353
$
—
$
21,104
Agency mortgage-backed residential
85,048
3,152
(21
)
88,179
86,840
2,428
(167
)
89,101
Collateralized loan obligations
44,730
—
(3,042
)
41,688
44,732
—
(3,978
)
40,754
State and municipal
28,708
917
(57
)
29,568
28,301
346
(493
)
28,154
Corporate bonds
23,347
313
(1,573
)
22,087
20,831
199
(1,486
)
19,544
Total available for sale
$
202,135
$
5,154
$
(4,693
)
$
202,596
$
201,455
$
3,326
$
(6,124
)
$
198,657
The Bank owns Collateralized Loan Obligations (CLOs), which are
debt securities secured by professionally managed portfolios of
senior-secured loans to corporations. CLO managers are typically
large non-bank financial institutions or banks and are typically
$300 million to $1 billion in size, contain one hundred or more
loans and have five to six credit tranches ranging from AAA, AA, A,
BBB, BB, B and equity tranche. Interest and principal are paid
first to the AAA tranche then to the next lower rated tranche.
Losses are borne first by the equity tranche then by the
subsequently higher rated tranche. CLOs may be less liquid than
government securities from time to time and volatility in the CLO
market may cause the value of these investments to decline.
The market value of CLOs may be affected by, among other things,
changes in composition of the underlying loans, changes in the cash
flows from the underlying loans, defaults and recoveries on the
underlying loans, capital gains and losses on the underlying loans,
prepayments on the underlying loans, and other conditions or
economic factors. The fair value of the Bank’s CLOs declined by
approximately $3.6 million, or 8% of amortized cost, during the
first quarter of 2020 as market liquidity within the CLO sector was
disrupted by COVID-19. During the second quarter of 2020, the fair
value of the Bank’s CLOs improved by approximately $936,000, or 2%
of amortized cost, as the market stabilized.
Although the Bank attempts to mitigate the credit and liquidity
risks associated with CLOs by purchasing CLOs with credit ratings
of A or higher, completing pre-purchase due diligence, and through
ongoing monitoring, no assurance can be given that these risk
mitigation efforts will be successful. At June 30, 2020, $26.4
million and $15.3 million of our CLOs were AA and A rated,
respectively. There were no CLOs rated below A and none of the CLOs
were subject to ratings downgrade in 2019 or in the first half of
2020. Stress testing was completed on each security in the CLO
portfolio as of quarter-end. Each security in the portfolio passed,
without dollar loss, a stress scenario characterized as severe,
which assumed a ten percent per annum constant prepayment rate, a
twelve percent per annum constant default rate for four years
followed by a four percent rate thereafter, and a forty-five
percent recovery rate on a one-year lag. The Bank’s CLOs are all
floating rate with rates set on a quarterly basis at three-month
LIBOR plus a spread.
The fair value of the Bank’s corporate bond portfolio was also
impacted by market disruption and declining rates, resulting in a
fair value decline of approximately $1.5 million, or 7% of
amortized cost, during the first quarter. During the second quarter
of 2020, the fair value of the Bank’s corporate bond portfolio
improved by approximately $27,000 as the market stabilized. The
corporate bond portfolio consists of eleven subordinated debt
securities of U.S. banks and bank holding companies with maturities
ranging from 2024 to 2037. The securities are either fixed for five
years converting to floating at an index over LIBOR or floating at
an index over LIBOR from inception. Management regularly monitors
the financial condition of these corporate issuers by reviewing
their regulatory and public filings.
The Bank has the intent and ability to hold its CLO and
corporate debt securities to maturity and, at this juncture, has
determined the value decline is temporary in nature.
Provision and Allowance for Loan Losses – The Bank
maintains an allowance for loan losses believed to be sufficient to
absorb probable incurred losses existing in the loan portfolio.
Management evaluates the adequacy of the allowance using, among
other things, historical loan loss experience, known and inherent
risks in the portfolio, adverse situations that may affect the
borrower’s ability to repay, estimated value of the underlying
collateral and current economic conditions and trends. The
allowance may be allocated for specific loans or loan categories,
but the entire allowance is available for any loan. The allowance
consists of specific and general components. The specific component
relates to loans that are individually evaluated and measured for
impairment. The general component is based on historical loss
experience adjusted for qualitative environmental factors.
Management develops allowance estimates based on actual loss
experience adjusted for current economic conditions and trends.
Allowance estimates are a prudent measurement of the risk in the
loan portfolio applied to individual loans based on loan type. If
the mix and amount of future charge-off percentages differ
significantly from the assumptions used by management in making its
determination, management may be required to materially increase
its allowance for loan losses and provision for loan losses, which
could adversely affect results.
The allowance for loan losses to total loans was 1.05% at June
30, 2020, compared to 0.95% at March 31, 2020, and 1.10% at June
30, 2019. Loans acquired in the November 2019 branch transaction
totaled $109.8 million at June 30, 2020, and $118.0 million at
March 31, 2020. These loans were recorded at fair value as
determined by an independent third party. The remaining discount
associated with the fair value purchase accounting adjustments on
the acquired loans was $347,000 at June 30, 2020, compared to
$427,000 at March 31, 2020. Any subsequent deterioration of these
acquired loans may require an adjustment through the allowance for
loan loss. Net loan charge-offs were $22,000 and $298,000,
respectively, for the three and six months ended June 30, 2020,
compared to net loan recoveries of $146,000 and net loan
charge-offs of $48,000, respectively, for the three and six months
ended June 30, 2019.
While the Company has experienced historically strong trends in
asset quality over the last several quarters and management’s
assessment of risk in the loan portfolio has been low, a provision
of $1.1 million and $2.2 million, or $0.12 and $0.23, per common
shares after taxes, was recorded in the second quarter and the
first six months of 2020, respectively, compared to no provision
for loan losses in the second quarter and first six months of 2019.
The 2020 loan loss provisions were attributable to the net loan
charge-offs during the period, trends within the portfolio over the
period, and primarily to changes in the economic and business
environment attributable to COVID-19, the state and national
emergencies that have been declared and the resultant risk the
pandemic poses for business disruptions for the Bank’s borrowers
which may lead to credit quality deterioration.
While the Company expects the U.S. Government’s economic
response to the COVID-19 pandemic through monetary policy and
fiscal stimulus will provide meaningful support to the economy,
management deemed it prudent to increase the allowance for loan
losses through its qualitative environmental factors to account for
the pandemic risk.
COVID-19 Short-term Loan Concessions – In response to
requests from borrowers who have been impacted by COVID-19 through
business and cash flow interruption, the Bank made short-term loan
modifications as defined under section 4013 of the Coronavirus Aid
Relief and Economic Security Act (“CARES Act”) involving principal
deferrals (interest only) and, in other cases, principal and
interest deferrals. These short-term modifications are not troubled
debt restructurings. The following table details those
modifications by loan category and type as of June 30, 2020:
June 30, 2020
Amount
Number
(dollars in thousands)
Commercial:
Interest only
$
321
7
Principal and interest deferral
3,269
24
Commercial Real Estate
Construction:
Interest only
—
—
Principal and interest deferral
14,887
5
Farmland:
Interest only
9
1
Principal and interest deferral
2,357
15
Nonfarm nonresidential:
Interest only
18,981
33
Principal and interest deferral
90,674
61
Residential Real Estate
Multi-family:
Interest only
1,730
2
Principal and interest deferral
11,067
3
1-4 Family:
Interest only
4,569
21
Principal and interest deferral
13,030
77
Consumer:
Interest only
75
9
Principal and interest deferral
50
8
Agriculture:
Interest only
485
1
Principal and interest deferral
—
—
Other:
Interest only
—
—
Principal and interest deferral
—
—
Total modified loans
$
161,504
267
Retail purpose commercial real estate operators, as well as
hotel and restaurant operators, have been disproportionately
impacted by COVID-19. As of June 30, 2020, the Bank had loans
totaling $62.8 million secured by retail purpose commercial real
estate, $50.5 million secured by hotel and lodging real estate, and
$29.8 million secured by limited and full-service restaurant real
estate, or 6.4%, 5.2%, and 3.1% of total loans. As of June 30,
2020, loans with outstanding principal balances of $25.3 million
for retail purpose commercial real estate, $49.3 million for hotel
and lodging real estate, and $20.3 million for limited and
full-service restaurant real estate were granted principal and
interest deferrals. As of June 30, 2020, interest accrued but
uncollected totaled $1.6 million for loans subject to short-term
modifications.
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”), declined to $3.5 million, or 0.27%, of total assets
at June 30, 2020, compared with $5.2 million, or 0.41%, of total
assets at March 31, 2020, and $6.2 million, or 0.55%, of total
assets at June 30, 2019. Non-performing loans declined to $1.9
million, or 0.19%, of total loans at June 30, 2020, compared with
$2.0 million, or 0.20%, of total loans at March 31, 2020, and $2.9
million, or 0.37%, of total loans at June 30, 2019.
OREO declined from $3.2 million at March 31, 2020, to $1.6
million at June 30, 2020, as sales totaled $1.6 million for the
second quarter of 2020. There were no fair value write-downs
arising from changing marketing strategies for the three and six
months ended June 30, 2020, compared to $110,000 and $260,000 for
the three and six months ended June 30, 2019, respectively.
Non-interest Income and Expense – Non-interest income for
the second quarter of 2020 increased $155,000 to $1.6 million,
compared with $1.4 million for the second quarter of 2019. The
increase was primarily related to bank card interchange fees
primarily as a result of the deposit accounts acquired in the
branch acquisition transaction on November 15, 2019. Non-interest
expense increased $1.0 million, or 14.0%, to $8.2 million for the
second quarter of 2020, compared with $7.2 million for the second
quarter of 2019. The increase in the second quarter of 2020 was
primarily due to an increase in salaries and employee benefits of
$718,000, as the Bank added sales talent and customer facing
associates during the latter half of 2019 and branch staff in
connection with the branch purchase transaction. In response to
COVID-19 and the change in customer branch usage patterns, the Bank
realized a reduction in FTEs from 248 as of March 31, 2020, to 228
as of June 30, 2020, through attrition and workforce reduction.
Salaries and employee benefits for the second quarter of 2020
included approximately $111,000 in severance expense. Quarterly
savings of approximately $150,000 are expected as a result of these
position eliminations.
Non-interest income for the first six months of 2020 increased
$595,000 to $3.3 million, compared with $2.7 million for the first
six months of 2019. The increase was primarily due to an increase
in bank card interchange fees of $509,000. Non-interest expense
increased $2.0 million, or 13.6%, to $16.5 million for the first
six months of 2020, compared with $14.5 million for the first six
months of 2019. The increase was primarily due to increases of $1.3
million in salaries and employee benefits and $320,000 in deposit
account related expense partially offset by a decrease of $270,000
in OREO expense.
Subordinated Notes – Subsequent to quarter end, on July
21, 2020, 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, on July 31, 2020,
the Company will sell and issue $8.0 million in aggregate principal
amount of its 5.75% Fixed-to-Floating Rate Subordinated Notes due
July 31, 2029 (the “Notes”). The Notes were offered and will be
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 net proceeds from
the offering to retire in total its senior debt in the amount of
$5.0 million and retain the balance for general corporate
purposes.
The Notes will bear interest at a fixed annual rate of 5.75%
through July 31, 2024, payable semi-annually in arrears, at which
time the interest rate shall reset quarterly to an interest rate
per annum equal to the then-current three-month LIBOR plus 395
basis points, payable quarterly in arrears. The Notes are
redeemable, in whole or in part, on July 31, 2025, 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 will be 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 qualify as Tier 2
capital for regulatory capital purposes for the Company.
About Limestone Bancorp, Inc.
Limestone Bancorp, Inc. (NASDAQ: LMST) is a Louisville,
Kentucky-based bank holding company which operates banking centers
in 14 counties through its wholly-owned subsidiary Limestone Bank.
The Bank’s markets include metropolitan Louisville in Jefferson
County and the surrounding counties of Bullitt and Henry and extend
south along the Interstate 65 corridor. The Bank serves south
central, southern, and western Kentucky from banking centers in
Barren, Butler, Daviess, Edmonson, Green, Hardin, Hart, Ohio, and
Warren counties. The Bank also has banking centers in Lexington,
Kentucky, the second largest city in the state, and Frankfort,
Kentucky, the state capital. 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: the impact and duration of the COVID-19 pandemic
and national, state and local emergency conditions the pandemic has
produced; 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, 2019, and Form 10-Q for the
three months ended March 31, 2020.
Additional Information
Unaudited supplemental financial information for the second
quarter ending June 30, 2020, 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
6/30/20
6/30/19
6/30/20
6/30/19
Income Statement Data
Interest income
$
12,786
$
12,376
$
26,053
$
24,562
Interest expense
2,676
3,576
6,181
6,803
Net interest income
10,110
8,800
19,872
17,759
Provision for loan losses
1,100
—
2,150
—
Net interest income after provision
9,010
8,800
17,722
17,759
Service charges on deposit accounts
441
571
1,109
1,067
Bank card interchange fees
863
596
1,613
1,104
Bank owned life insurance income
116
118
212
217
Gain (loss) on sales and calls of
securities, net
(5
)
(5
)
(5
)
(5
)
Other
186
166
396
347
Non-interest income
1,601
1,446
3,325
2,730
Salaries & employee benefits
4,633
3,915
9,171
7,830
Occupancy and equipment
983
854
1,982
1,752
Professional fees
235
179
443
344
Marketing expense
104
212
318
439
FDIC insurance
67
103
67
211
Data processing expense
380
315
739
628
State franchise and deposit tax
360
315
720
630
Deposit account related expense
460
310
911
591
Other real estate owned expense
22
142
38
308
Litigation and loan collection expense
59
34
124
80
Communications expense
247
189
465
379
Insurance expense
111
112
214
226
Postage and delivery
152
134
320
275
Other
423
410
959
812
Non-interest expense
8,236
7,224
16,471
14,505
Income before income taxes
2,375
3,022
4,576
5,984
Income tax expense (benefit)
393
(611
)
754
(488
)
Net income
$
1,982
$
3,633
$
3,822
$
6,472
Weighted average shares – Basic
7,488,173
7,459,631
7,485,028
7,464,743
Weighted average shares – Diluted
7,488,173
7,459,631
7,485,028
7,464,743
Basic earnings per common share
$
0.26
$
0.49
$
0.51
$
0.87
Diluted earnings per common share
$
0.26
$
0.49
$
0.51
$
0.87
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
6/30/20
3/31/20
12/31/19
9/30/19
6/30/19
Income Statement Data
Interest income
$
12,786
$
13,267
$
12,537
$
12,485
$
12,376
Interest expense
2,676
3,505
3,676
3,755
3,576
Net interest income
10,110
9,762
8,861
8,730
8,800
Provision for loan losses
1,100
1,050
—
—
—
Net interest income after provision
9,010
8,712
8,861
8,730
8,800
Service charges on deposit accounts
441
668
681
633
571
Bank card interchange fees
863
750
711
623
596
Bank owned life insurance income
116
96
96
97
118
Gain (loss) on sales and calls of
securities, net
(5
)
—
—
—
(5
)
Other
186
210
166
181
166
Non-interest income
1,601
1,724
1,654
1,534
1,446
Salaries & employee benefits
4,633
4,538
4,201
4,202
3,915
Occupancy and equipment
983
999
890
880
854
Professional fees
235
208
171
254
179
Marketing expense
104
214
218
251
212
FDIC insurance
67
—
—
—
103
Data processing expense
380
359
316
315
315
State franchise and deposit tax
360
360
265
315
315
Deposit account related expense
460
451
333
300
310
Other real estate owned expense
22
16
35
25
142
Litigation and loan collection expense
59
65
77
32
34
Communications expense
247
218
200
193
189
Insurance expense
111
103
109
109
112
Postage and delivery
152
168
140
129
134
Acquisition costs
—
—
775
—
—
Other
423
536
584
446
410
Non-interest expense
8,236
8,235
8,314
7,451
7,224
Income before income taxes
2,375
2,201
2,201
2,813
3,022
Income tax expense (benefit)
393
361
437
531
(611
)
Net income
$
1,982
$
1,840
$
1,764
$
2,282
$
3,633
Weighted average shares – Basic
7,488,173
7,481,884
7,471,680
7,471,582
7,459,631
Weighted average shares – Diluted
7,488,173
7,481,884
7,471,680
7,471,582
7,459,631
Basic earnings per common share
$
0.26
$
0.25
$
0.24
$
0.31
$
0.49
Diluted earnings per common share
$
0.26
$
0.25
$
0.24
$
0.31
$
0.49
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
6/30/20
3/31/20
12/31/19
9/30/19
6/30/19
Assets
Loans
$
975,759
$
961,561
$
926,271
$
803,569
$
803,114
Allowance for loan losses
(10,228
)
(9,150
)
(8,376
)
(8,904
)
(8,832
)
Net loans
965,531
952,411
917,895
794,665
794,282
Securities available for sale
202,596
198,657
209,000
203,381
208,614
Federal funds sold & interest-bearing
deposits
39,027
23,639
21,962
50,327
40,755
Cash and due from financial
institutions
9,990
9,509
8,241
7,680
6,860
Premises and equipment
19,000
19,282
19,658
15,098
14,827
Premises held for sale
1,149
1,185
900
935
995
Bank owned life insurance
16,238
16,128
16,037
15,946
15,853
FHLB Stock
6,142
6,837
6,237
6,467
6,693
Other real estate owned
1,625
3,225
3,225
3,225
3,225
Deferred taxes, net
27,054
28,208
27,765
28,029
28,708
Goodwill
6,252
6,252
6,252
—
—
Intangible assets
2,372
2,436
2,500
—
—
Accrued interest receivable and other
assets
7,532
6,441
6,107
6,411
5,976
Total Assets
$
1,304,508
$
1,274,210
$
1,245,779
$
1,132,164
$
1,126,788
Liabilities and Equity
Certificates of deposit
$
446,370
$
467,535
$
476,534
$
488,121
$
505,263
Interest checking
167,814
157,621
146,038
95,508
95,296
Money market
166,376
154,851
160,837
153,663
162,917
Savings
119,327
92,235
56,015
34,618
33,553
Total interest-bearing deposits
899,887
872,242
839,424
771,910
797,029
Demand deposits
224,901
185,658
187,551
151,524
141,448
Total deposits
1,124,788
1,057,900
1,026,975
923,434
938,477
FHLB advances
20,644
61,349
61,389
56,430
51,470
Junior subordinated debentures
21,000
21,000
21,000
21,000
21,000
Subordinated capital note
17,000
17,000
17,000
17,000
—
Senior debt
5,000
5,000
5,000
5,000
10,000
Accrued interest payable and other
liabilities
7,020
7,450
8,665
4,973
4,419
Total liabilities
1,195,452
1,169,699
1,140,029
1,027,837
1,025,366
Total stockholders’ equity
109,056
104,511
105,750
104,327
101,422
Total Liabilities and Stockholders’
Equity
$
1,304,508
$
1,274,210
$
1,245,779
$
1,132,164
$
1,126,788
Ending shares outstanding
7,485,872
7,489,305
7,471,975
7,471,582
7,457,832
Book value per common share
$
14.57
$
13.95
$
14.15
$
13.96
$
13.60
Tangible book value per common
share
13.42
12.79
12.98
13.96
13.60
LIMESTONE BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share
data)
As of
6/30/20
3/31/20
12/31/19
9/30/19
6/30/19
Average Balance Sheet Data
Assets
$
1,305,923
$
1,273,167
$
1,167,179
$
1,105,432
$
1,100,459
Loans
978,316
949,204
846,235
800,194
793,460
Earning assets
1,222,760
1,188,314
1,090,752
1,035,522
1,033,581
Deposits
1,116,420
1,052,944
982,991
933,548
926,730
Long-term debt and advances
75,259
105,407
73,695
63,369
71,989
Interest bearing liabilities
971,770
971,554
882,473
852,539
855,100
Stockholders’ equity
107,348
107,632
105,295
103,818
97,730
Quarterly Performance Ratios
Return on average assets
0.61
%
0.58
%
0.60
%
0.82
%
1.32
%
Return on average equity
7.43
6.88
6.65
8.72
14.91
Yield on average earning assets (tax
equivalent)
4.21
4.50
4.57
4.79
4.81
Cost of interest-bearing liabilities
1.11
1.45
1.65
1.75
1.68
Net interest margin (tax equivalent)
3.33
3.31
3.23
3.35
3.42
Efficiency ratio
70.30
71.70
71.70
72.59
70.47
Asset Quality Data
Nonaccrual loans
$
1,410
$
1,500
$
1,528
$
2,389
$
2,028
Troubled debt restructurings on
accrual
462
466
475
188
905
Loan 90 days or more past due still on
accrual
—
—
—
—
—
Total non-performing loans
1,872
1,966
2,003
2,577
2,933
Real estate acquired through
foreclosures
1,625
3,225
3,225
3,225
3,225
Other repossessed assets
—
—
—
—
—
Total non-performing assets
$
3,497
$
5,191
$
5,228
$
5,802
$
6,158
Non-performing loans to total loans
0.19
%
0.20
%
0.22
%
0.32
%
0.37
%
Non-performing assets to total assets
0.27
0.41
0.42
0.51
0.55
Allowance for loan losses to
non-performing loans
546.37
465.41
418.17
345.52
301.13
Allowance for loan losses to total
loans
1.05
%
0.95
%
0.90
%
1.11
%
1.10
%
Loan Charge-off Data
Loans charged off
$
(193
)
$
(335
)
$
(639
)
$
(299
)
$
(72
)
Recoveries
171
59
111
371
218
Net recoveries (charge-offs)
$
(22
)
$
(276
)
$
(528
)
$
72
$
146
Loans by Risk Category
Pass
$
925,558
$
915,985
$
888,707
$
754,050
$
767,662
Watch
43,014
38,464
27,522
37,537
22,929
Special Mention
—
—
—
—
—
Substandard
7,187
7,112
10,042
11,982
12,523
Doubtful
—
—
—
—
—
Total
$
975,759
$
961,561
$
926,271
$
803,569
$
803,114
Loans by Past Due Status
Past due loans:
30 – 59 days
$
458
$
1,158
$
1,747
$
979
$
858
60 – 89 days
197
248
670
557
1,015
90 days or more
—
—
—
—
—
Nonaccrual loans
1,410
1,500
1,528
2,389
2,028
Total past due and nonaccrual
loans
$
2,065
$
2,906
$
3,945
$
3,925
$
3,901
LIMESTONE BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share
data)
As of
6/30/20
3/31/20
12/31/19
9/30/19
6/30/19
Risk-based Capital Ratios -
Company
Tier I leverage ratio
8.05
%
8.29
%
8.30
%
9.66
%
9.46
%
Common equity Tier I risk-based capital
ratio
8.45
8.26
8.32
10.19
9.82
Tier I risk-based capital ratio
9.93
9.86
9.32
11.88
11.56
Total risk-based capital ratio
12.57
12.37
11.85
14.84
12.56
Risk-based Capital Ratios – Limestone
Bank
Tier I leverage ratio
9.54
%
9.67
%
9.99
%
11.25
%
10.01
%
Common equity Tier I risk-based capital
ratio
11.79
11.50
11.25
13.87
12.26
Tier I risk-based capital ratio
11.79
11.50
11.25
13.87
12.26
Total risk-based capital ratio
12.78
12.38
12.08
14.89
13.26
FTE employees, end of period
228
248
244
226
219
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 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.
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 from the calculation net gains
on the sale of securities and expenses disclosed from time to time
as non-recurring in nature. Management believes this provides a
reasonable measure of primary banking expenses relative to primary
banking revenue.
As of
6/30/20
3/31/20
12/31/19
9/30/19
6/30/19
Tangible Book Value Per Share
(in thousands, except share and
per share data)
Common stockholders’ equity
$
109,056
$
104,511
$
105,750
$
104,327
$
101,422
Less: Goodwill
6,252
6,252
6,252
—
—
Less: Intangible assets
2,372
2,436
2,500
—
—
Tangible common equity
100,432
95,823
96,998
104,327
101,422
Shares outstanding
7,485,872
7,489,305
7,471,975
7,471,582
7,457,832
Tangible book value per common share
$
13.42
$
12.79
$
12.98
$
13.96
$
13.60
Book value per common share
14.57
13.95
14.15
13.96
13.60
Three Months Ended
6/30/20
3/31/20
12/31/19
9/30/19
6/30/19
Efficiency Ratio
(in thousands)
Net interest income
$
10,110
$
9,762
$
8,861
$
8,730
$
8,800
Non-interest income
1,601
1,724
1,654
1,534
1,446
Less: Net gain (loss) on securities
(5
)
—
—
—
(5)
Revenue used for efficiency ratio
11,716
11,486
10,515
10,264
10,251
Non-interest expense
8,236
8,235
8,314
7,451
7,224
Less: Acquisition costs
—
—
775
—
—
Expenses used for efficiency ratio
8,236
8,235
7,539
7,451
7,224
Efficiency ratio
70.30
%
71.70
%
71.70
%
72.59
%
70.47
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200722005100/en/
John T. Taylor Chief Executive Officer (502) 499-4800
Limestone Bancorp (NASDAQ:LMST)
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