Louisville-based Limestone Bancorp is buying four Kentucky bank branches from its larger Louisville-based competitor Republic Bancorp for about $10 million.
Limestone plans to acquire two branches in Daviess County and one each in Hardin and Franklin counties. The deal would boost the number of Limestone branches to 19, all of which are in Kentucky. It plans to open another location in Fayette County in October. Republic Bancorp has 45 branches in five states.
Limestone President and CEO John T. Taylor said in a news release that the deal would enable Limestone to increase its market share and expand into new markets. Republic Chairman and CEO Steve Trager said the transaction would allow the company to focus on its remaining markets.
The deal would include Limestone acquiring the four branches’ physical assets, valued at about $1.3 million, plus $153 million in deposits and $112 million in loans.
Limestone Chief Financial Officer Phil Barnhouse told Insider via email that the company expects the purchase price to be in the $9 million to $10 million range.
“The purchase price will be finalized at closing based upon the average dollar amount of deposits in the branches for the 10 days immediately preceding the closing multiplied by a deposit premium factor which we estimate to be approximately 6%,” Barnhouse said. “The final deposit premium percentage will be determined at closing based upon the average balance of deposits at the time of closing and the branch location of the deposits.”
Limestone also would make employment offers to employees in the branches, the companies said. Trager said both parties are “committed to a smooth transition.”
Taylor said the acquisition would allow Limestone Bank “to grow its geographic footprint with entry into the Frankfort and Elizabethtown markets. The Elizabethtown location will allow us to bridge a gap in our footprint along I-65, and the Frankfort location will provide another point of access along I-64 between our Louisville and Lexington facilities.”
Trager said the sale “positions Republic to focus our capital and efforts on our many remaining markets and their surrounding areas in order to continue our exciting growth trajectory.”
The bank holding companies said they expect the deal to close in the fourth quarter, subject to regulatory approvals and other customary closing conditions. Both boards of directors have approved the transaction.
Limestone also said it has borrowed $17 million, using a portion of that to reduce debt by $5 million and another portion for “general corporate purposes.”
The company on Wednesday said that its second-quarter net income rose 83%, to $3.6 million, thanks in part to a $611,000 income tax gain. In the second quarter of last year, the bank had incurred nearly $500,000 in income tax expenses.
Net interest income rose 3.2%, to $8.8 million, and noninterest income jumped 7.3%, to $1.4 million. Noninterest income rose primarily because of higher bank card interchange fees, which spiked 33%. A bank interchange fee is the portion of a credit card payment that goes to the bank that issued the card. Noninterest expense fell 2.4%.
Republic Bancorp had reported last week that its net income, of $18 million, rose 14.9%.
Limestone’s shares were unchanged early Thursday afternoon, trading for $15.11. Republic Bancorp’s shares were down about 1.2%, trading for $47.49. The S&P 500 was down 0.63%.