LOUISVILLE, Ky.--(BUSINESS WIRE)--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.
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.
Unaudited supplemental financial information for the first quarter ending March 31, 2019, follows.
LIMESTONE BANCORP, INC.
|Three Months Ended|
|Income Statement Data|
|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||—||—|
|Salaries & employee benefits||3,915||3,788|
|Occupancy and equipment||898||895|
|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|
|Income before income taxes||2,962||2,263|
|Income tax expense||123||329|
|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||$||0.00|
LIMESTONE BANCORP, INC.
|Income Statement Data|
|Net interest income||8,959||8,704||8,412||8,374||8,181|
|Provision (negative provision) for loan losses||—||—||(350||)||(150||)||—|
|Net interest income after provision||8,959||8,704||8,762||8,524||8,181|
|Service charges on deposit accounts||496||588||608||591||568|
|Bank card interchange fees||508||573||411||446||401|
|Bank owned life insurance income||99||100||100||138||99|
|Gain (loss) on sales and calls of securities, net||—||—||—||(6||)||—|
|Salaries & employee benefits||3,915||3,923||3,893||3,885||3,788|
|Occupancy and equipment||898||915||896||880||895|
|Data processing expense||313||280||281||307||324|
|State franchise and deposit tax||315||272||282||282||282|
|Deposit account related expense||281||170||213||221||219|
|Other real estate owned expense||166||278||271||237||82|
|Litigation and loan collection expense||46||83||61||48||53|
|Income before income taxes||2,962||3,054||3,041||2,466||2,263|
|Income tax expense||123||614||604||483||329|
|Weighted average shares – Basic||7,469,912||7,457,206||7,455,316||7,424,742||6,285,420|
|Weighted average shares – Diluted||7,469,912||7,457,206||7,455,316||7,424,742||6,285,420|
|Basic earnings per common share||$||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.
|Allowance for loan losses||(8,686||)||(8,880||)||(8,634||)||(8,580||)||(8,526||)|
|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|
|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|
|Liabilities and Equity|
|Certificates of deposit||$||465,369||$||450,886||$||457,239||$||435,454||$||431,921|
|Total interest bearing deposits||762,402||751,613||738,465||709,677||710,927|
|Junior subordinated debentures||21,000||21,000||21,000||21,000||23,025|
|Accrued interest payable and other liabilities||3,651||5,815||5,662||5,262||5,186|
|Preferred stockholders’ equity||—||—||—||—||2,771|
|Common stockholders’ equity||96,319||92,097||88,212||86,399||85,459|
|Total stockholders’ equity||96,319||92,097||88,212||86,399||88,230|
|Total Liabilities and Stockholders’ Equity||$||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||$||11.53|
|Tangible book value per common share||12.91||12.34||11.83||11.59||11.53|
|Average Balance Sheet Data|
|Long-term debt and advances||76,524||75,339||74,994||76,209||74,063|
|Interest bearing liabilities||834,637||824,300||810,917||783,123||777,140|
|Quarterly Performance Ratios|
|Return on average assets||1.07||%||0.91||%||0.93||%||0.79||%||0.79||%|
|Return on average equity||12.32||10.78||11.05||8.97||10.71|
|Yield on average earning assets (tax equivalent)||4.90||4.66||4.56||4.51||4.45|
|Cost of interest bearing liabilities||1.57||1.46||1.32||1.13||0.96|
|Net interest margin (tax equivalent)||3.61||3.46||3.45||3.57||3.63|
|Asset Quality Data|
|Troubled debt restructurings on accrual||910||910||910||916||922|
|Loan 90 days or more past due still on accrual||—||—||—||—||—|
|Total non-performing loans||2,831||2,901||3,602||4,086||5,292|
|Real estate acquired through foreclosures||3,335||3,485||3,750||4,510||4,385|
|Other repossessed assets||—||—||—||—||—|
|Total non-performing assets||$||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||)||$||(47||)|
|Net recoveries (charge-offs)||$||(194||)||$||246||$||404||$||204||$||324|
|Loans by Risk Category|
|Loans by Past Due Status|
|Past due loans:|
|30 – 59 days||$||2,001||$||1,593||$||1,492||$||1,134||$||6,402|
|60 – 89 days||240||331||929||538||472|
|90 days or more||—||—||—||—||—|
|Total past due and nonaccrual loans||$||4,162||$||3,915||$||5,113||$||4,842||$||11,244|
|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||%||
|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|
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|
|Efficiency Ratio||(in thousands)|
|Net interest income||$||8,959||$||8,704||$||8,412||$||8,374||$||8,181|
|Less: Net gain (loss) on securities||—||—||—||(6||)||—|
|Revenue used for efficiency ratio||10,243||10,376||9,921||9,727||9,432|