Limestone Bancorp, Inc. (NASDAQ: LMST) (“the Company”), parent
company of Limestone Bank (“the Bank”), today reported unaudited
results for the third quarter of 2020. Net income available to
common shareholders for the third quarter of 2020 was $2.1 million,
or $0.28 per basic and diluted common share, compared with $2.3
million, or $0.31 per basic and diluted share, for the third
quarter of 2019. Net income for the nine months ended September 30,
2020, was $5.9 million, or $0.79 per diluted common share, compared
with net income of $8.8 million, or $1.17 per diluted share, for
the nine months ended September 30, 2019.
Net income before taxes was $2.3 million and $6.8 million for
the third quarter of 2020 and for the first nine months of 2020,
respectively, compared to $2.8 million and $8.8 million for the
third quarter and first nine months of 2019, respectively. Income
tax expense was $190,000 and $944,000 for the third quarter of 2020
and for the first nine months of 2020, respectively, compared to
income tax expense of $531,000 and $43,000 for the third quarter of
2019 and for the first nine months of 2019, respectively.
For 2019 and 2020, income tax expense benefitted from the
establishment of a net deferred tax asset related to a change in
Kentucky tax law enacted during 2019. Income tax expense benefitted
$244,000 and $33,000 for the third quarter of 2020 and 2019,
respectively, or $0.03 per basic and diluted common share, and less
than $0.01 per basic and diluted common share, respectively. Income
tax expense benefitted $395,000 and $1.6 million for the first nine
months of 2020 and 2019, respectively, or $0.05 per basic and
diluted common share, and $0.21 per basic and diluted common share,
respectively. 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 nine 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 decreased to $9.9 million for the third
quarter of 2020, compared to $10.1 million for the second quarter
of 2020, and increased compared to $8.7 million for the third
quarter of 2019. Average loans decreased to $963.5 million for the
third quarter of 2020, compared to $978.3 million for the second
quarter of 2020, and increased compared to $800.2 million for the
third quarter of 2019. Average loans for the second and third
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, as well as $42.3 million loan
originations under the SBA Paycheck Protection Program. Net
interest margin decreased to 3.27% for the third quarter of 2020,
compared with 3.33% for the second quarter of 2020, and 3.35% for
the third quarter of 2019.
The yield on earning assets decreased to 3.98% in the third
quarter of 2020, compared to 4.21% in the second quarter of 2020,
and 4.79% in the third quarter of 2019. The yield on earning assets
for the second and third 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 $387,000,
$535,000, and $247,000 for the quarters ended September 30, 2020,
June 30, 2020, and September 30, 2019, respectively. This
represents 13 basis points, 17 basis points, and nine basis points
of yield on earning assets and net interest margin for the quarters
ended September 30, 2020, June 30, 2020, and September 30, 2019,
respectively. Loan fee income for the third quarter of 2020
included $195,000 in fees earned on SBA PPP loans, as compared to
$179,000 in the second quarter of 2020.
The cost of interest-bearing liabilities was 0.90% for the third
quarter of 2020, compared to 1.11% in the second quarter of 2020,
and 1.75% in the third quarter of 2019. The cost of
interest-bearing liabilities continued to decline based on the
downward repricing of time deposits. Time deposits declined $47.9
million during the third quarter of 2020 as approximately $127.3
million of time deposits with an average rate of 1.41% matured or
repriced at lower interest rates. During the third quarter of 2020,
newly originated or renewed time deposits had an average rate of
0.39% and an average term of approximately 23 months.
Net interest income increased to $29.8 million for the first
nine months of 2020, compared with $26.5 million in the first nine
months of 2019. Average loans increased to $963.7 million for the
first nine months of 2020, compared to $786.8 million for the first
nine months of 2019. Average loans were positively impacted by the
branch purchase transaction on November 15, 2019, along with loan
growth during 2019 and 2020, as well as loan originations under the
SBA Paycheck Protection Program. Net interest margin decreased to
3.30% in the first nine months of 2020, compared with 3.46% for the
first nine months of 2019.
The yield on earning assets decreased to 4.23% for the first
nine months of 2020, compared to 4.83% for the first nine months of
2019. The amount of loan fee income included in total interest
income was $1.1 million and $960,000 for the nine months ended
September 30, 2020 and September 30, 2019, respectively. This
represents 13 basis points of yield on earning assets and net
interest margin for the nine months ended September 30, 2020 and
2019. The cost of interest-bearing liabilities was 1.15% for the
first nine months of 2020, compared to 1.67% in the first nine
months of 2019.
As of September 30, 2020, time deposits comprise $398.4 million
of the Company’s liabilities including $84.7 million with a current
average rate of 1.01% which reprice or mature in the fourth quarter
of 2020. The following table denotes contractual time deposit
maturities and average rates as of September 30, 2020:
Maturity
Quarter
As of September 30,
2020 (in thousands)
Weighted Average Rate
Q4-2020
84,715
1.01
Q1-2021
100,682
1.03
Q2-2021
90,146
0.61
Q3-2021
28,443
0.77
Q4-2021
9,837
0.75
Thereafter
84,606
1.23
Total time deposits
$
398,429
0.95
%
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 $948,000, or
0.5%, to $203.5 million at September 30, 2020, compared with $202.6
million at June 30, 2020, and $203.4 million at September 30,
2019.
The following table sets forth the carrying value of our
securities portfolio at the dates indicated.
September 30, 2020
June 30, 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
$
19,158
$
931
$
—
$
20,089
$
20,302
$
772
$
—
$
21,074
Agency mortgage-backed residential
76,388
2,974
(13
)
79,349
85,048
3,152
(21
)
88,179
Collateralized loan obligations
44,730
—
(1,905
)
42,825
44,730
—
(3,042
)
41,688
State and municipal
34,391
1,076
(32
)
35,435
28,708
917
(57
)
29,568
Corporate bonds
27,116
373
(1,643
)
25,846
23,347
313
(1,573
)
22,087
Total available for sale
$
201,783
$
5,354
$
(3,593
)
$
203,544
$
202,135
$
5,154
$
(4,693
)
$
202,596
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. During the first quarter of 2020, the fair value
of the Bank’s CLO portfolio declined as the market was disrupted by
COVID-19. At March 31, 2020, the CLO portfolio had an unrealized
loss of $4.0 million, or 9% of amortized cost. During the second
and third quarters of 2020, the fair value improved as the market
stabilized. At September 30, 2020, the portfolio had an unrealized
loss of $1.9 million, or 4% of amortized cost.
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 September 30, 2020, $27.0
million, $13.5 million, and $2.4 million of our CLOs were AA, A,
and BBB rated, respectively. There was one CLO rated below A at
BBB, which was downgraded during the third quarter 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 has also
been impacted by market disruption and declining rates. At March
31, 2020, the corporate bond portfolio had a net unrealized loss of
$1.3 million, or 6% of amortized cost. At September 30, 2020, the
portfolio had a net unrealized loss of $1.3 million, or 5% of
amortized cost. The corporate bond portfolio consists of 12
subordinated debt securities of U.S. banks and bank holding
companies with maturities ranging from 2024 to 2037. The securities
are either initially 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 declines are 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 1.18% at
September 30, 2020, compared to 1.05% at June 30, 2020, and 1.11%
at September 30, 2019. Loans acquired in the November 2019 branch
transaction totaled $100.3 million at September 30, 2020, and
$109.8 million at June 30, 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 $301,000 at September 30,
2020, compared to $347,000 at June 30, 2020. Any subsequent
deterioration of these acquired loans may require an adjustment
through the allowance for loan loss. Net loan charge-offs were
$97,000 and $395,000, respectively, for the three and nine months
ended September 30, 2020, compared to net loan recoveries of
$72,000 and $24,000, respectively, for the three and nine months
ended September 30, 2019.
A provision of $1.4 million and $3.5 million, or $0.14 and
$0.37, per common shares after taxes, was recorded in the third
quarter and the first nine months of 2020, respectively, compared
to no provision for loan losses in the third quarter and first nine
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.
Substandard loans increased $15.4 million during the third quarter
of 2020. The increase in substandard loans was primarily
attributable to $12.3 million in commercial and industrial loans
migrating from watch to substandard during the quarter.
While the Company expects the U.S. Government’s economic
response to the COVID-19 pandemic through monetary policy and
fiscal stimulus have provided 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 – The Bank has
elected to account for eligible loan modifications under Section
4013 of the CARES Act. To be an eligible loan under Section 4013 of
the CARES Act, a loan modification must be (1) related to the
coronavirus pandemic (“COVID-19”); (2) executed on a loan that was
not more than 30 days past due as of December 31, 2019; and (3)
executed between March 1, 2020, and the earlier of (A) 60 days
after the date of termination of the national emergency declared by
the President on March 13, 2020, concerning the COVID-19 outbreak
(the “national emergency”) or (B) December 31, 2020. Eligible loan
modifications are not required to be classified as TDRs and will
not be reported as past due provided they are performing in
accordance with the modified terms. Interest income will continue
to be recognized in accordance with GAAP unless the loan is placed
on nonaccrual status.
Short term loan modifications totaled $64.9 million as of
September 30, 2020, compared to $161.5 million at June 30, 2020.
The following table details the status of the Bank’s short-term
loan modifications by loan category or type as of September 30,
2020:
First Modification
Active
Subsequent Modification
Active
Modification Ended
Total Modified Loans
Total Loan Portfolio
% Modified to Total
Portfolio
(in thousands)
Hotel, Motel, & Lodging
$
—
$
8,112
$
22,818
$
30,930
$
51,435
60.1
%
Retail Facility
3,087
6,764
—
9,851
62,707
15.7
Commercial Real Estate
5,228
76
107
5,411
161,524
3.3
1-4 Family Residential
2,306
450
225
2,981
194,829
1.5
Restaurant Full Service
2,184
6,307
2,872
11,363
19,966
56.9
Restaurant Limited Service
2,303
—
—
2,303
14,842
15.5
Multi-family
—
—
—
—
63,757
—
Construction and Development
—
—
—
—
39,980
—
Commercial & Industrial
345
—
1,239
1,584
218,762
0.7
Farmland
—
—
—
—
69,017
—
Consumer, Agriculture & Other
486
—
—
486
77,649
0.6
Total
$
15,939
$
21,709
$
27,261
$
64,909
$
974,468
6.7
%
First Modification Active includes loans within the terms of the
original modification agreement. Subsequent Modification Active
includes loans with a matured original modification that have been
further modified within the short-term parameters. Modification
Ended includes loans that have reached final deferred payment and
have yet to make a payment in accordance with the loan’s original
terms or have yet to request a subsequent modification. Loans that
returned to original contracted terms with a verified payment are
considered cured and are no longer included as modified loans in
the table above.
Subsequent to September 30, 2020, $27.1 million of the loans
categorized as Modification Ended in the table above have received
a verified payment and are now considered cured.
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”), increased to $4.2 million, or 0.32%, of total
assets at September 30, 2020, compared with $3.5 million, or 0.27%,
of total assets at June 30, 2020, and $5.8 million, or 0.51%, of
total assets at September 30, 2019. Non-performing loans increased
to $2.5 million, or 0.26%, of total loans at September 30, 2020,
compared with $1.9 million, or 0.19%, of total loans at June 30,
2020, and $2.6 million, or 0.32%, of total loans at September 30,
2019.
OREO remained unchanged at $1.6 million as of September 30,
2020, compared to June 30, 2020, and decreased compared to $3.2
million at September 30, 2019. There were no fair value write-downs
arising from changing marketing strategies for the three or nine
months ended September 30, 2020, compared to no fair value
write-downs and $260,000 for the three and nine months ended
September 30, 2019, respectively.
Non-interest Income and Expense – Non-interest income for
the third quarter of 2020 increased $208,000 to $1.7 million,
compared with $1.5 million for the third 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 $628,000, or 8.4%, to $8.1 million for the third
quarter of 2020, compared with $7.5 million for the third quarter
of 2019. The increase in the third quarter of 2020 was primarily
due to an increase in salaries and employee benefits of $211,000
and $187,000 in deposit account related expense. 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. The increase in deposit account related expense is the
result of the deposit accounts acquired in the branch acquisition
transaction.
Non-interest income for the first nine months of 2020 increased
$803,000 to $5.1 million, compared with $4.3 million for the first
nine months of 2019. The increase was primarily due to an increase
in bank card interchange fees of $767,000. Non-interest expense
increased $2.6 million, or 11.8%, to $24.6 million for the first
nine months of 2020, compared with $22.0 million for the first nine
months of 2019. The increase was primarily due to increases of $1.6
million in salaries and employee benefits and $507,000 in deposit
account related expense. 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. As a result,
average FTEs for 2020 were elevated as compared to 2019. In
response to COVID-19 and the change in customer branch usage
patterns, the Bank realized a reduction in FTEs during the second
quarter of 2020 through attrition and workforce reduction. The
increase in deposit account related expense is the result of the
deposit accounts acquired in the branch acquisition
transaction.
Capital – The Company’s capital ratios were positively
impacted by the additional $8.0 million of subordinated notes
issued on July 21, 2020, as the subordinated notes meet the
requirements to qualify as Tier 2 capital.
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, regulation, fiscal, and
monetary policies, 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 six months ended June 30, 2020.
Additional Information
Unaudited supplemental financial information for the third
quarter ending September 30, 2020, 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
9/30/20
9/30/19
9/30/20
9/30/19
Income Statement Data
Interest income
$
12,094
$
12,485
$
38,147
$
37,047
Interest expense
2,151
3,755
8,332
10,558
Net interest income
9,943
8,730
29,815
26,489
Provision for loan losses
1,350
—
3,500
—
Net interest income after provision
8,593
8,730
26,315
26,489
Service charges on deposit accounts
565
633
1,674
1,700
Bank card interchange fees
881
623
2,494
1,727
Bank owned life insurance income
113
97
325
314
Gain (loss) on sales and calls of
securities, net
—
—
(5
)
(5
)
Other
183
181
579
528
Non-interest income
1,742
1,534
5,067
4,264
Salaries & employee benefits
4,413
4,202
13,584
12,032
Occupancy and equipment
1,008
880
2,990
2,632
Professional fees
261
254
704
598
Marketing expense
134
251
452
690
FDIC insurance
81
—
148
211
Data processing expense
382
315
1,121
943
State franchise and deposit tax
360
315
1,080
945
Deposit account related expense
487
300
1,398
891
Other real estate owned expense
20
25
58
333
Litigation and loan collection expense
54
32
178
112
Communications expense
201
193
666
572
Insurance expense
102
109
316
335
Postage and delivery
156
129
476
404
Other
420
446
1,379
1,258
Non-interest expense
8,079
7,451
24,550
21,956
Income before income taxes
2,256
2,813
6,832
8,797
Income tax expense
190
531
944
43
Net income
$
2,066
$
2,282
$
5,888
$
8,754
Weighted average shares – Basic
7,499,223
7,471,582
7,489,795
7,467,048
Weighted average shares – Diluted
7,499,223
7,471,582
7,489,795
7,467,048
Basic earnings per common share
$
0.28
$
0.31
$
0.79
$
1.17
Diluted earnings per common share
$
0.28
$
0.31
$
0.79
$
1.17
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
9/30/20
6/30/20
3/31/20
12/31/19
9/30/19
Income Statement Data
Interest income
$
12,094
$
12,786
$
13,267
$
12,537
$
12,485
Interest expense
2,151
2,676
3,505
3,676
3,755
Net interest income
9,943
10,110
9,762
8,861
8,730
Provision for loan losses
1,350
1,100
1,050
—
—
Net interest income after provision
8,593
9,010
8,712
8,861
8,730
Service charges on deposit accounts
565
441
668
681
633
Bank card interchange fees
881
863
750
711
623
Bank owned life insurance income
113
116
96
96
97
Gain (loss) on sales and calls of
securities, net
—
(5
)
—
—
—
Other
183
186
210
166
181
Non-interest income
1,742
1,601
1,724
1,654
1,534
Salaries & employee benefits
4,413
4,633
4,538
4,201
4,202
Occupancy and equipment
1,008
983
999
890
880
Professional fees
261
235
208
171
254
Marketing expense
134
104
214
218
251
FDIC insurance
81
67
—
—
—
Data processing expense
382
380
359
316
315
State franchise and deposit tax
360
360
360
265
315
Deposit account related expense
487
460
451
333
300
Other real estate owned expense
20
22
16
35
25
Litigation and loan collection expense
54
59
65
77
32
Communications expense
201
247
218
200
193
Insurance expense
102
111
103
109
109
Postage and delivery
156
152
168
140
129
Acquisition costs
—
—
—
775
—
Other
420
423
536
584
446
Non-interest expense
8,079
8,236
8,235
8,314
7,451
Income before income taxes
2,256
2,375
2,201
2,201
2,813
Income tax expense
190
393
361
437
531
Net income
$
2,066
$
1,982
$
1,840
$
1,764
$
2,282
Weighted average shares – Basic
7,499,223
7,488,173
7,481,884
7,471,680
7,471,582
Weighted average shares – Diluted
7,499,223
7,488,173
7,481,884
7,471,680
7,471,582
Basic earnings per common share
$
0.28
$
0.26
$
0.25
$
0.24
$
0.31
Diluted earnings per common share
$
0.28
$
0.26
$
0.25
$
0.24
$
0.31
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
9/30/20
6/30/20
3/31/20
12/31/19
9/30/19
Assets
Loans
$
974,468
$
975,759
$
961,561
$
926,271
$
803,569
Allowance for loan losses
(11,481
)
(10,228
)
(9,150
)
(8,376
)
(8,904
)
Net loans
962,987
965,531
952,411
917,895
794,665
Securities available for sale
203,544
202,596
198,657
209,000
203,381
Federal funds sold & interest-bearing
deposits
24,358
39,027
23,639
21,962
50,327
Cash and due from financial
institutions
7,593
9,990
9,509
8,241
7,680
Premises and equipment
18,572
19,000
19,282
19,658
15,098
Premises held for sale
1,110
1,149
1,185
900
935
Bank owned life insurance
23,347
16,238
16,128
16,037
15,946
FHLB Stock
5,962
6,142
6,837
6,237
6,467
Other real estate owned
1,625
1,625
3,225
3,225
3,225
Deferred taxes, net
26,540
27,054
28,208
27,765
28,029
Goodwill
6,252
6,252
6,252
6,252
—
Intangible assets
2,308
2,372
2,436
2,500
—
Accrued interest receivable and other
assets
7,426
7,532
6,441
6,107
6,411
Total Assets
$
1,291,624
$
1,304,508
$
1,274,210
$
1,245,779
$
1,132,164
Liabilities and Equity
Certificates of deposit
$
398,429
$
446,370
$
467,535
$
476,534
$
488,121
Interest checking
168,735
167,814
157,621
146,038
95,508
Money market
174,588
166,376
154,851
160,837
153,663
Savings
134,962
119,327
92,235
56,015
34,618
Total interest-bearing deposits
876,714
899,887
872,242
839,424
771,910
Demand deposits
217,675
224,901
185,658
187,551
151,524
Total deposits
1,094,389
1,124,788
1,057,900
1,026,975
923,434
FHLB advances
30,634
20,644
61,349
61,389
56,430
Junior subordinated debentures
21,000
21,000
21,000
21,000
21,000
Subordinated capital note
25,000
17,000
17,000
17,000
17,000
Senior debt
—
5,000
5,000
5,000
5,000
Accrued interest payable and other
liabilities
8,315
7,020
7,450
8,665
4,973
Total liabilities
1,179,338
1,195,452
1,169,699
1,140,029
1,027,837
Total stockholders’ equity
112,286
109,056
104,511
105,750
104,327
Total Liabilities and Stockholders’
Equity
$
1,291,624
$
1,304,508
$
1,274,210
$
1,245,779
$
1,132,164
Ending shares outstanding
7,499,183
7,485,872
7,489,305
7,471,975
7,471,582
Book value per common share
$
14.97
$
14.57
$
13.95
$
14.15
$
13.96
Tangible book value per common
share
13.83
13.42
12.79
12.98
13.96
LIMESTONE BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share
data)
As of
9/30/20
6/30/20
3/31/20
12/31/19
9/30/19
Average Balance Sheet Data
Assets
$
1,295,814
$
1,305,923
$
1,273,167
$
1,167,179
$
1,105,432
Loans
963,486
978,316
949,204
846,235
800,194
Earning assets
1,213,039
1,222,760
1,188,314
1,090,752
1,035,522
Deposits
1,111,865
1,116,420
1,052,944
982,991
933,548
Long-term debt and advances
65,769
75,259
105,407
73,695
63,369
Interest bearing liabilities
955,661
971,770
971,554
882,473
852,539
Stockholders’ equity
110,930
107,348
107,632
105,295
103,818
Quarterly Performance Ratios
Return on average assets
0.63
%
0.61
%
0.58
%
0.60
%
0.82
%
Return on average equity
7.41
7.43
6.88
6.65
8.72
Yield on average earning assets (tax
equivalent)
3.98
4.21
4.50
4.57
4.79
Cost of interest-bearing liabilities
0.90
1.11
1.45
1.65
1.75
Net interest margin (tax equivalent)
3.27
3.33
3.31
3.23
3.35
Efficiency ratio
69.14
70.30
71.70
71.70
72.59
Non-interest expense to average assets
2.48
2.54
2.60
2.83
2.67
Asset Quality Data
Nonaccrual loans
$
2,038
$
1,410
$
1,500
$
1,528
$
2,389
Troubled debt restructurings on
accrual
489
462
466
475
188
Loan 90 days or more past due still on
accrual
—
—
—
—
—
Total non-performing loans
2,527
1,872
1,966
2,003
2,577
Real estate acquired through
foreclosures
1,625
1,625
3,225
3,225
3,225
Other repossessed assets
—
—
—
—
—
Total non-performing assets
$
4,152
$
3,497
$
5,191
$
5,228
$
5,802
Non-performing loans to total loans
0.26
%
0.19
%
0.20
%
0.22
%
0.32
%
Non-performing assets to total assets
0.32
0.27
0.41
0.42
0.51
Allowance for loan losses to
non-performing loans
454.33
546.37
465.41
418.17
345.52
Allowance for loan losses to total
loans
1.18
%
1.05
%
0.95
%
0.90
%
1.11
%
Loan Charge-off Data
Loans charged off
$
(150
)
$
(193
)
$
(335
)
$
(639
)
$
(299
)
Recoveries
53
171
59
111
371
Net recoveries (charge-offs)
$
(97
)
$
(22
)
$
(276
)
$
(528
)
$
72
Loans by Risk Category
Pass
$
923,895
$
925,558
$
915,985
$
888,707
$
754,050
Watch
27,782
43,014
38,464
27,522
37,537
Special Mention
364
—
—
—
—
Substandard
22,427
7,187
7,112
10,042
11,982
Doubtful
—
—
—
—
—
Total
$
974,468
$
975,759
$
961,561
$
926,271
$
803,569
Loans by Past Due Status
Past due loans:
30 – 59 days
$
482
$
458
$
1,158
$
1,747
$
979
60 – 89 days
265
197
248
670
557
90 days or more
—
—
—
—
—
Nonaccrual loans
2,038
1,410
1,500
1,528
2,389
Total past due and nonaccrual
loans
$
2,785
$
2,065
$
2,906
$
3,945
$
3,925
LIMESTONE BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share
data)
As of
9/30/20
6/30/20
3/31/20
12/31/19
9/30/19
Risk-based Capital Ratios -
Company
Tier I leverage ratio
8.17
%
8.05
%
8.29
%
8.30
%
9.66
%
Common equity Tier I risk-based capital
ratio
8.54
8.45
8.26
8.32
10.19
Tier I risk-based capital ratio
9.77
9.93
9.86
9.32
11.88
Total risk-based capital ratio
13.22
12.57
12.37
11.85
14.84
Risk-based Capital Ratios – Limestone
Bank
Tier I leverage ratio
9.90
%
9.54
%
9.67
%
9.99
%
11.25
%
Common equity Tier I risk-based capital
ratio
11.88
11.79
11.50
11.25
13.87
Tier I risk-based capital ratio
11.88
11.79
11.50
11.25
13.87
Total risk-based capital ratio
12.97
12.78
12.38
12.08
14.89
FTE employees, end of period
224
228
248
244
226
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
9/30/20
6/30/20
3/31/20
12/31/19
9/30/19
Tangible Book Value Per Share
(in thousands, except share and
per share data)
Common stockholders’ equity
$
112,286
$
109,056
$
104,511
$
105,750
$
104,327
Less: Goodwill
6,252
6,252
6,252
6,252
—
Less: Intangible assets
2,308
2,372
2,436
2,500
—
Tangible common equity
103,726
100,432
95,823
96,998
104,327
Shares outstanding
7,499,183
7,485,872
7,489,305
7,471,975
7,471,582
Tangible book value per common share
$
13.83
$
13.42
$
12.79
$
12.98
$
13.96
Book value per common share
14.97
14.57
13.95
14.15
13.96
Three Months Ended
9/30/20
6/30/20
3/31/20
12/31/19
9/30/19
Efficiency Ratio
(in thousands)
Net interest income
$
9,943
$
10,110
$
9,762
$
8,861
$
8,730
Non-interest income
1,742
1,601
1,724
1,654
1,534
Less: Net gain (loss) on securities
—
(5
)
—
—
—
Revenue used for efficiency ratio
11,685
11,716
11,486
10,515
10,264
Non-interest expense
8,079
8,236
8,235
8,314
7,451
Less: Acquisition costs
—
—
—
775
—
Expenses used for efficiency ratio
8,079
8,236
8,235
7,539
7,451
Efficiency ratio
69.14
%
70.30
%
71.70
%
71.70
%
72.59
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201021005044/en/
John T. Taylor Chief Executive Officer (502) 499-4800
Limestone Bancorp (NASDAQ:LMST)
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