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| 8-K - LIMESTONE BANCORP, INC. 8-K - LIMESTONE BANCORP, INC. | a52462441.htm |
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Exhibit 99.1
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July 21, 2021
FORWARD LOOKING STATEMENTS: Statements in this document 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. These forward looking statements include statements related to the
expected timing and benefits of the proposed branch acquisition and estimates of deposits, loans and other assets to be acquired. 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, 2020 and Form 10-Q filings for the periods thereafter.NON-GAAP FINANCIAL MEASURES: These slides contain non-GAAP financial measures which the
Company’s management uses in their analysis of the Company’s performance OR management believes facilitates an understanding of the Company’s performance. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of
the registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable
measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or includes amounts, or is subject to adjustments that have the effect of
including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirements of
Regulation G, Limestone Bancorp, Inc. has provided reconciliations, as necessary, of the non-GAAP financial measure to the most directly comparable GAAP financial measure. 2
Limestone Bancorp is a Kentucky-based bank holding company – Nasdaq: LMSTLimestone Bank is the 12th
largest bank domiciled in Kentucky based on total assets Corporate headquarters in Louisville, Ky.Approximately $1.34 billion in assets and 231 associates (fte) at 6.30.21Broad scope of high-quality retail and business banking products &
servicesManagement team assembled under leadership of John T. Taylor, President & CEO with extensive market knowledge and community relationships 3 About Limestone Bancorp and Limestone Bank
Management Team John T. TaylorPresident & CEO, Limestone BancorpChairman, President & CEO,
Limestone BankJoined July 2012Over 30 years in industryAmerican Founders Bank – Lexington, KYPNC Bank, NA – President of Ohio & N. KY Region Phillip W. BarnhouseCFO, Limestone Bancorp since January 2012CFO, Limestone BankJoined Ascencia
Bank (former Limestone Subsidiary) Sept 1998Previous Experience:Arthur Andersen LLP – Chattanooga, TN Stephanie RennerSenior Vice President, General Counsel, Limestone BankJoined August 2012Previous experience:American Founders BankStites
& Harbison, PLLC – Lexington, KYBryan Cave, LLP – Los Angeles, CA John R. DavisExecutive Vice President, Chief Credit Officer, Limestone BankJoined August 201225 Years Previous Experience:American Founders Bank – Lexington, KYNational
City Bank – Louisville, KY andDayton & Cleveland, OHJoseph C. SeilerExecutive Vice President, Head of Commercial Banking, Limestone BankJoined April 201325 Years Previous Experience:PNC Bank, NA – Louisville, KYNational City Bank –
Louisville, KY 4
Board of Directors W. Glenn HoganFounder, CEO and PresidentHogan Real EstateLouisville, KYDirector
since 2006 Michael T. LevyPresident MuirfieldInsurance LLCLexington, KYDirector since 2014 James M. ParsonsChief Financial Officer Ball Homes LLCLexington, KYDirector since 2015 Bradford T. RayRetired CEO and ChairmanSteel Technologies,
Inc.Louisville, KYDirector since 2014 Kevin J. KoomanPartnerPatriot Financial Partners LPPhiladelphia, PADirector since 2019Dr. Edmond J. SeifriedPrincipal S&B West LLCBethlehem, PADirector since 2015 John T. TaylorPresident & CEO,
Limestone BancorpChairman, President & CEO, Limestone BankDirector since 2012Celia CatlettFormer General Counsel and Corporate Secretary, Texas Roadhouse, Inc.Louisville, KYDirector Since 2018 5
Highlights and Accomplishments Talent acquisition – Board, management, and production teamEnterprise
Risk Management system implementation & strategic acquisitionCredit adjudication and centralized operationsRegulatory relationsCompliance management systemsCore system conversion 2018Quality loan production; deposit mix shift; solid asset
quality; improving profitability metricsFinancial transactions:Q2-20: Issued $8.0 million subordinated debt; qualifying Tier 2 Capital; retired $5.0 million seniorQ3-19: Issued $17.0 million subordinated debt; qualifying Tier 2 Capital;
prepaid $5.0 million seniorQ2-18: Retired all issued and outstanding preferred stock in $3.5 million transactionQ1-18: Issued 1.15 million shares of common stock raising $15 million in new capital for BancorpQ4-17: Reversed deferred tax asset
valuation allowance restoring $31.3 million net dtaQ2-17: Completed $10 million senior borrowing and contributed $9 million in new capital to BankQ2-16: Issued 800,000 shares of common stock raising $5 million in new capital for
BancorpStrategic Plan: Organic growth in rural and metro markets and strategic acquisitionsQ4-19: Completed acquisition of 4 branches; $132 mil deposits & $127 mil loans 6
Limestone Bank Locations 7 14 counties across the Commonwealth of Kentucky20 Banking CentersOne new
banking center opened in Louisville, KY (Jefferson) in Q2’21Relocated one Lexington banking center to new Lexington location in Q2’21Closed one banking center in Owensboro in Q2’21. Targeting Q4’21 for relocation of an Owensboro banking
center to a new location in same community
Metro Market Overview Louisville Lexington Owensboro Bowling Green Corporate Headquarters:
Brown-Forman, Churchill Downs, Humana, Kindred Healthcare, Papa John’s International, Texas Roadhouse, and Yum! Brands Corporate Headquarters: Fasig Tipton, Jif (peanut butter), Keeneland, Lexmark, and Tempur Sealy Corporate Headquarters:
Owensboro Health Corporate Headquarters: Camping World, Fruit of the Loom, Houchens Industries, and the Medical Center at Bowling Green Other large employers: UPS, Ford Motor Company, GE Appliances, and Norton Healthcare Other large
employers: Xerox, Toyota, IBM, Lockheed Martin, and Valvoline Other large employers: Kimberly-Clark, US Bank Mortgage Processing, and Toyotetsu Other large employers: General Motors Corvette plant, Rafferty’s Restaurants Universities:
University of Louisville and Bellarmine University Universities: University of Kentucky and Transylvania University Universities: Kentucky Wesleyan University and Brescia University Universities: Western Kentucky University Deposits in
Market:$21.2 billionLimestone market share 1.0%MSA Population – 1.265 mil (69th Largest in US)Note: Four largest cities in KYSource: United States Census Bureau Deposits in Market:$7.9 billionLimestone market share 1.0%MSA Population – 517k
(138th largest in US) Deposits in Market:$2.7 billionLimestone market share 3.6%MSA Population – 119k(363rd largest in US) Deposits in Market:$2.7 billionLimestone market share 1.2%MSA Population - 179k (270th largest in US) 8
Financial Summary 9
Financial Summary 10 Income tax expense for 2019 and 2020 was positively impacted by approximately
$1.6 mil and $478k, respectively, by current & deferred tax benefits from KY tax law changes – EPS impact was 21 cents per share in 2019 & 6 cents per share in 2020.Beginning in 2021, Kentucky bank franchise tax (capital tax)
eliminated and replaced with conventional state income tax at 5% statutory rate.
Investment Portfolio 11 At June 30, 2021, $27.9 million, $9.5 million, and $2.5 million of the
bank’s CLOs were AA, A, and BBB rated, respectively. CLOs are floating rate, with rates set on a quarterly basis at three-month LIBOR plus a spread.
Loan Portfolio Commercial & industrial loans include:PPP fees are recognized in income on the
level yield method over the life of the related loanRound 1 &2 PPP loan originations totaled $42.4 million and the resulting PPP fees totaled $1.7 million of which all have substantially been recognized in incomeRound 3 PPP loan
originations totaled $23.5 million and the resulting PPP fees totaled $2.3 million; $650k have been recognized as income through Q2’21 and $1.65 million are deferred 12
Loan Portfolio and Asset Quality Trends 13
Deposits 14 Cost of Deposits declined from 0.37% in Q1’21 to 0.32% in Q2’21Non-interest-bearing
demand stable quarter over quarterCDs declined from 31% of total deposits to 27% from Q1’21 to Q2’21During the Q2’21 $105.6 million in CDs matured with weighted average rate of 0.56%During Q2’21 - Renewed or newly originated CDs had an
average rate of 0.21% and an average term of approximately 14 monthsQ3’21 Maturing CD’s total $66.0 million with weighted average rate of 0.43%
Capital Ratios 15
Deferred Tax Asset (DTA) Deferred Tax Asset – The Company has a net deferred tax asset of $23.5
million at June 30, 2021. Our ability to utilize deferred tax assets depends upon generating sufficient future levels of taxable income. Federal NOL’s total $93.1 million and begin to expire in 2032 and State NOL’s total $33.5 million and
begin to expire in 2025. 16
Deferred Tax Asset (DTA) As of 6.30.2021, LMST’s net DTA totaled approximately $23.5 million.
Deferred tax assets and liabilities are measured using current enacted tax rates (currently 21% federal & 5% state).Section 382 of the Internal Revenue Code governs DTA impairment and “ownership change”.An “ownership change” is defined as
a more than 50% change in ownership – complex assessment.382 imposes an annual ceiling on future use of the Company’s NOLs, credit carry-forwards and built-in losses.Tends to slow rate of NOL utilization (reducing present value of tax
savings).Some NOLs and other tax benefits could expire before utilization is allowed if the Company does not generate sufficient taxable income.In May 2021, LMST extended a tax benefits preservation plan to June 30, 2024.Under Section 382 of
the IRS Code, a permanent impairment of a substantial portion of the DTA could be triggered if shareholders owning 5% or more of the Company increase their ownership by more than 50 percentage points over a defined period of time.The tax
benefits preservation plan is designed to reduce the likelihood of an “ownership change”.Any shareholder or group that acquires ownership of 5% or more of the Company could be subject to significant dilution in its holdings if our Board does
not approve such acquisition.Existing shareholders of 5% or more are also subject to dilution if they increase their holdings without Board approval.In May 2021, shareholders approved extending an amendment to the articles of incorporation to
further protect the long-term value of the Company’s NOLs.The amendment provides a means to block transfers of our common shares that could result in an ownership change under Section 382. 17
Subordinated Debt Issued amount: $17.0 million – Issued July 23, 2019; $ 8.0 million - Issued July
31, 2020; Qualifying Tier 2 Capital Rated BBB by Egan Jones Rating Company Rate: Fixed at 5.75% for Five Years then floating at 3.95% over three-month libor for the final five years Repay terms: Interest only semi-annually; principal due at
maturity. Maturity: July 31, 2029; pre-payable without penalty beginning July 31, 2025 Collateral: Unsecured 18
Limestone Bancorp, Inc. - Junior Subordinated Debt 19
Non-GAAP Financial Measures 20