Le Lézard
Classified in: Business
Subject: EARNINGS

Limestone Bancorp Reports Net Income of $2.8 million, or $0.38 per Share for the 1st Quarter of 2019


Limestone Bancorp, Inc. (NASDAQ: LMST) ("the Company"), parent company of Limestone Bank ("the Bank"), today reported unaudited results for the first quarter of 2019. Net income for the first quarter of 2019 was $2.8 million, or $0.38 per basic and diluted common share, compared to net income of $1.9 million, or $0.31 per basic and diluted share, for the first quarter of 2018.

Net income before taxes and income tax expense was $3.0 million and $123,000, respectively for the first quarter of 2019, compared with $2.3 million and $329,000, respectively for the first quarter of 2018. Income tax expense for the first quarter of 2019 benefitted $341,000, or $0.05 per basic and diluted common share, 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 eliminates the Kentucky bank franchise tax, which is assessed at a rate of 1.1% of average capital, and 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.

Net Interest Income ? Net interest income was $9.0 million for the first quarter of 2019, compared to $8.7 million for the fourth quarter of 2018, and $8.2 million for the first quarter of 2018. Average loans increased to $766.5 million for the first quarter of 2019, compared to $765.5 million for the fourth quarter of 2018, and $724.2 million for the first quarter of 2018. Net interest margin was 3.61% for the first quarter of 2019, 3.46% for the fourth quarter of 2018, and 3.63% for the first quarter of 2018.

The yield on earning assets increased to 4.90% in the first quarter of 2019, compared to 4.66% in the fourth quarter of 2018, and 4.45% in the first 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 $546,000, $166,000, and $97,000 for the quarters ended March 31, 2019, December 31, 2018, and March 31, 2018, respectively. This represents 22 basis points, six basis points, and five basis points of yield on earning assets and net interest margin for the quarters ended March 31, 2019, December 31, 2018, and March 31, 2018, respectively. The cost of interest bearing liabilities was 1.57% for the first quarter of 2019, compared to 1.46% in the fourth quarter of 2018, and 0.96% in the first quarter of 2018.

Provision and Allowance for Loan Losses ? The allowance for loan losses to total loans was 1.10% at March 31, 2019, compared to 1.16% at December 31, 2018, and 1.17% at March 31, 2018. Net loan charge-offs were $194,000 for the first quarter of 2019, compared to net loan recoveries of $324,000 for the first quarter of 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 in the first quarter of 2019 or 2018.

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 $6.2 million, or 0.57% of total assets at March 31, 2019, compared with $6.4 million, or 0.60% of total assets at December 31, 2018, and $9.7 million, or 0.97% of total assets at March 31, 2018. Non-performing loans decreased to $2.8 million, or 0.36% of total loans at March 31, 2019, compared with $2.9 million, or 0.38% of total loans at December 31, 2018, and from $5.3 million, or 0.73% of total loans at March 31, 2018.

OREO at March 31, 2019, decreased to $3.3 million, compared with $3.5 million at December 31, 2018, and $4.4 million at March 31, 2018. Fair value write-downs arising from changing marketing strategies totaled $150,000 for the first quarter of 2019, compared to $60,000 for the first quarter of 2018.

Non-interest Income and Expense ? Non-interest income was $1.3 million for the first quarter of 2019 and the first quarter of 2018. Non-interest expense increased $112,000, or 1.6% to $7.3 million for the first quarter of 2019, compared with $7.2 million for the first quarter of 2018. The increase from the first quarter of 2019 was primarily due to an increase in salaries and employee benefits of $127,000.

Capital ? At March 31, 2019, the Bank's Tier 1 leverage ratio was 9.88%, compared with 9.60% at December 31, 2018, and its Total risk-based capital ratio was 13.01% at March 31, 2019, compared with 12.88% at December 31, 2018. At March 31, 2019, the Company's Tier 1 leverage ratio was 9.30%, compared with 9.00% at December 31, 2018, and its Total risk-based capital ratio was 12.32%, compared with 12.23% at December 31, 2018. At March 31, 2019, the Company's Common equity Tier 1 risk-based capital ratio was 9.57%, compared with 9.44% at December 31, 2018.

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 first quarter ending March 31, 2019, follows.

 
 
 

LIMESTONE BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share data)

 
        Three Months Ended
3/31/19     3/31/18

 

 

Income Statement Data
Interest income $ 12,186 $ 10,015
Interest expense   3,227   1,834
Net interest income 8,959 8,181
Provision (negative provision) for loan losses   ?   ?
Net interest income after provision 8,959 8,181
 
Service charges on deposit accounts 496 568
Bank card interchange fees 508 401
Bank owned life insurance income 99 99
Gain (loss) on sales and calls of securities, net ? ?
Other   181   183
Non-interest income 1,284 1,251
 
Salaries & employee benefits 3,915 3,788
Occupancy and equipment 898 895
Professional fees 165 205
Marketing expense 227 300
FDIC insurance 108 182
Data processing expense 313 324
State franchise and deposit tax 315 282
Deposit account related expense 281 219
Other real estate owned expense 166 82
Litigation and loan collection expense 46 53
Other   847   839
Non-interest expense 7,281 7,169
 
Income before income taxes 2,962 2,263
Income tax expense   123   329
Net income 2,839 1,934

 

 

 
Weighted average shares ? Basic 7,469,912 6,285,420
Weighted average shares ? Diluted 7,469,912 6,285,420
 
Basic earnings per common share $ 0.38 $ 0.31
Diluted earnings per common share $ 0.38 $ 0.31
Cash dividends declared per common share $ 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
3/31/19 12/31/18 9/30/18 6/30/18 3/31/18
 
Income Statement Data
Interest income $ 12,186 $ 11,741 $ 11,120 $ 10,585 $ 10,015
Interest expense   3,227   3,037   2,708   2,211   1,834
Net interest income 8,959 8,704 8,412 8,374 8,181
Provision (negative provision) for loan losses   ?   ?   (350 )   (150 )   ?
Net interest income after provision 8,959 8,704 8,762 8,524 8,181
 
Service charges on deposit accounts 496 588 608 591 568
Bank card interchange fees 508 573 411 446 401
Bank owned life insurance income 99 100 100 138 99
Gain (loss) on sales and calls of securities, net ? ? ? (6 ) ?
Other   181   411   390   178   183
Non-interest income 1,284 1,672 1,509 1,347 1,251
 
Salaries & employee benefits 3,915 3,923 3,893 3,885 3,788
Occupancy and equipment 898 915 896 880 895
Professional fees 165 201 186 222 205
Marketing expense 227 247 259 308 300
FDIC insurance 108 118 118 139 182
Data processing expense 313 280 281 307 324
State franchise and deposit tax 315 272 282 282 282
Deposit account related expense 281 170 213 221 219
Other real estate owned expense 166 278 271 237 82
Litigation and loan collection expense 46 83 61 48 53
Other   847   835   770   876   839
Non-interest expense 7,281 7,322 7,230 7,405 7,169
 
Income before income taxes 2,962 3,054 3,041 2,466 2,263
Income tax expense   123   614   604   483   329
Net income $ 2,839 $ 2,440 $ 2,437 $ 1,983 $ 1,934
 
Weighted average shares ? Basic 7,469,912 7,457,206 7,455,316 7,424,742 6,285,420
Weighted average shares ? Diluted 7,469,912 7,457,206 7,455,316 7,424,742 6,285,420
 
Basic earnings per common share $ 0.38 $ 0.33 $ 0.33 $ 0.27 $ 0.31
Diluted earnings per common share $ 0.38 $ 0.33 $ 0.33 $ 0.27 $ 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
3/31/19     12/31/18     9/30/18     6/30/18     3/31/18
 
Assets
Loans $ 786,585 $ 765,244 $ 757,051 $ 749,234 $ 729,432
Allowance for loan losses   (8,686 )   (8,880 )   (8,634 )   (8,580 )   (8,526 )
Net loans 777,899 756,364 748,417 740,654 720,906
Securities available for sale 206,411 201,192 184,870 178,896 160,812
Federal funds sold & interest bearing deposits 24,029 28,398 31,761 33,534 30,073
Cash and due from financial institutions 6,461 6,963 5,770 7,013 7,610
Premises and equipment 14,926 14,655 17,027 16,813 16,789
Premises held for sale 1,050 1,050 ? ? ?
Bank owned life insurance 15,739 15,646 15,551 15,456 15,323
FHLB Stock 6,813 7,233 7,233 7,323 7,323
Other real estate owned 3,335 3,485 3,750 4,510 4,385
Deferred taxes, net 28,568 29,282 30,230 30,623 30,997
Accrued interest receivable and other assets   6,092     5,424     5,882     5,699     5,886  
Total Assets $ 1,091,323   $ 1,069,692   $ 1,050,491   $ 1,040,521   $ 1,000,104  
 
Liabilities and Equity
Certificates of deposit $ 465,369 $ 450,886 $ 457,239 $ 435,454 $ 431,921
Interest checking 96,537 94,269 87,407 88,955 92,048
Money market 166,430 171,924 159,499 150,048 150,974
Savings   34,066     34,534     34,320     35,220     35,984  
Total interest bearing deposits 762,402 751,613 738,465 709,677 710,927
Demand deposits   146,440     142,618     135,561     136,553     135,984  
Total deposits 908,842 894,231 874,026 846,230 846,911
FHLB advances 51,511 46,549 51,591 71,630 26,752
Junior subordinated debentures 21,000 21,000 21,000 21,000 23,025
Senior debt 10,000 10,000 10,000 10,000 10,000
Accrued interest payable and other liabilities   3,651     5,815     5,662     5,262     5,186  
Total liabilities 995,004 977,595 962,279 954,122 911,874
 
Preferred stockholders' equity ? ? ? ? 2,771
Common stockholders' equity   96,319     92,097     88,212     86,399     85,459  
Total stockholders' equity   96,319     92,097     88,212     86,399     88,230  
Total Liabilities and Stockholders' Equity $ 1,091,323   $ 1,069,692   $ 1,050,491   $ 1,040,521   $ 1,000,104  
 
Ending shares outstanding 7,460,614 7,462,720 7,456,590 7,454,993 7,409,864
Book value per common share $ 12.91 $ 12.34 $ 11.83 $ 11.59 $ 11.53
Tangible book value per common share 12.91 12.34 11.83 11.59 11.53

 
 
 

LIMESTONE BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share data)

 
        As of
3/31/19     12/31/18     9/30/18     6/30/18     3/31/18
Average Balance Sheet Data
Assets $ 1,075,553 $ 1,066,216 $ 1,037,636 $ 1,013,008 $ 987,390
Loans 766,505 765,542 748,444 734,709 724,203
Earning assets 1,009,948 1,001,093 968,876 943,023 915,762
Deposits 900,829 895,377 869,707 842,757 834,695
Long-term debt and advances 76,524 75,339 74,994 76,209 74,063
Interest bearing liabilities 834,637 824,300 810,917 783,123 777,140
Stockholders' equity 93,491 89,836 87,486 88,701 73,205
 
Quarterly Performance Ratios
Return on average assets 1.07 % 0.91 % 0.93 % 0.79 % 0.79 %
Return on average equity 12.32 10.78 11.05 8.97 10.71
Yield on average earning assets (tax equivalent) 4.90 4.66 4.56 4.51 4.45
Cost of interest bearing liabilities 1.57 1.46 1.32 1.13 0.96
Net interest margin (tax equivalent) 3.61 3.46 3.45 3.57 3.63
Efficiency ratio 71.08 70.57 72.88 76.13 76.01
 
Asset Quality Data
Nonaccrual loans $ 1,921 $ 1,991 $ 2,692 $ 3,170 $ 4,370
Troubled debt restructurings on accrual 910 910 910 916 922
Loan 90 days or more past due still on accrual   ?     ?     ?     ?     ?  
Total non-performing loans 2,831 2,901 3,602 4,086 5,292
Real estate acquired through foreclosures 3,335 3,485 3,750 4,510 4,385
Other repossessed assets   ?     ?     ?     ?     ?  
Total non-performing assets $ 6,166   $ 6,386   $ 7,352   $ 8,596   $ 9,677  
 
Non-performing loans to total loans 0.36 % 0.38 % 0.48 % 0.55 % 0.73 %
Non-performing assets to total assets 0.57 0.60 0.70 0.83 0.97
Allowance for loan losses to non-performing loans 306.82 306.10 239.70 209.99 161.11
 
Allowance for loan losses to total loans 1.10 % 1.16 % 1.14 % 1.15 % 1.17 %
 
Loan Charge-off Data
Loans charged off $ (278 ) $ (133 ) $ (143 ) $ (293 ) $ (47 )
Recoveries   84     379     547     497     371  
Net recoveries (charge-offs) $ (194 ) $ 246 $ 404 $ 204 $ 324
 
Loans by Risk Category
Pass $ 756,493 $ 745,604 $ 736,193 $ 720,446 $ 695,507
Watch 17,412 13,164 12,314 19,091 17,938
Special Mention ? 113 114 115 162
Substandard 12,680 6,363 8,430 9,582 15,825
Doubtful   ?     ?     ?     ?     ?  
Total $ 786,585 $ 765,244 $ 757,051 $ 749,234 $ 729,432
 
Loans by Past Due Status
Past due loans:
30 ? 59 days $ 2,001 $ 1,593 $ 1,492 $ 1,134 $ 6,402
60 ? 89 days 240 331 929 538 472
90 days or more ? ? ? ? ?
Nonaccrual loans   1,921     1,991     2,692     3,170     4,370  
Total past due and nonaccrual loans $ 4,162 $ 3,915 $ 5,113 $ 4,842 $ 11,244

 
 
 

LIMESTONE BANCORP, INC.
Unaudited Financial Information
(in thousands, except share and per share data)

 
    As of
3/31/19   12/31/18   9/30/18   6/30/18   3/31/18
Risk-based Capital Ratios - Company
Tier I leverage ratio 9.30 % 9.00 % 8.91 % 8.70 % 9.18 %
Common equity Tier I risk-based capital ratio 9.57 9.44 9.21 8.92 8.98
Tier I risk-based capital ratio 11.29 11.08 10.83 10.41 11.03
Total risk-based capital ratio 12.32 12.23 12.07 11.76 12.56
 
Risk-based Capital Ratios ? Limestone Bank
Tier I leverage ratio 9.88 % 9.60 %

9.51

%

9.37 % 9.31 %
Common equity Tier I risk-based capital ratio 12.01 11.83 11.56 11.23 11.18
Tier I risk-based capital ratio 12.01 11.83 11.56 11.23 11.18
Total risk-based capital ratio 13.01 12.88 12.60 12.26 12.43
 
FTE employees 207 214 215 217 214
 
 
 

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
3/31/19 12/31/18 9/30/18 6/30/18 3/31/18
Efficiency Ratio (in thousands)
 
Net interest income $ 8,959 $ 8,704 $ 8,412 $ 8,374 $ 8,181
Non-interest income 1,284 1,672 1,509 1,347 1,251
Less: Net gain (loss) on securities   ?     ?     ?     (6 )   ?  
Revenue used for efficiency ratio   10,243     10,376     9,921     9,727     9,432  
Non-interest expense 7,281 7,322 7,230 7,405 7,169
 
Efficiency ratio 71.08 % 70.57 % 72.88 % 76.13 % 76.01 %
 
 
 


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