LNB BANCORP INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - July 25, 2013

Attached files

file filename
8-K - LNB BANCORP, INC. 8-K - LNB BANCORP INCa50676684.htm
EX-99.2 - EXHIBIT 99.2 - LNB BANCORP INCa50676684ex99_2.htm

Exhibit 99.1

LNB Bancorp, Inc. Reports Second Quarter 2013 Results

  • Net income available to common shareholders of $1.7 million, a 52% increase from second quarter of last year
  • Noninterest income of $3.1 million, a 21% improvement
  • Nonperforming assets declined by $8.7 million, or 24%

LORAIN, Ohio--(BUSINESS WIRE)--July 25, 2013--LNB Bancorp, Inc. (NASDAQ:LNBB) (“LNB” or the “Company”) today reported financial results for the second quarter 2013. Net income available to common shareholders was $1.7 million, or $0.18 per common share, compared to $1.1 million, or $0.14 per common share, for the year-ago quarter. Net income available to common shareholders for the first six months of 2013 was $2.6 million, or $0.29 per share.

Noninterest income was $3.1 million for the second quarter of 2013 compared to $2.5 million for the prior-year second quarter. This 21% year over year increase was driven primarily by growth in mortgage and indirect auto lending businesses. Noninterest income for the first six months of 2013 was $6.4 million, up $986,000, or 18%, from the same six month period in 2012.

“Although interest rates increased at the end of the quarter, overall we posted a healthy gain on the sale of loans of $587,000 for the quarter, up 186% from $205,000 earned in the second quarter of 2012,” stated Daniel E. Klimas, president and chief executive officer of LNB Bancorp. “Noninterest income growth has helped to offset our margin compression. The growth in mortgage revenue was largely the result of strategic investments made in 2012 to expand our sales and credit teams,” added Klimas.

Noninterest expense was $8.6 million for the second quarter of 2013 compared with $9.0 million in the same period of 2012, a decrease of 4.7%. “Expense management continues to be a key contributor to our success,” stated Klimas.

The Company continues to make progress on improving credit quality as non-performing assets at the end of the second quarter of 2013 declined by $8.7 million from the second quarter of 2012. The ratio of non-performing assets to total assets at June 30, 2013 was 2.28%, down from 3.02% at June 30, 2012. The provision for loan losses was $1.1 million in the second quarter of 2013, down $617,000 from the 2012 second quarter, reflecting the Company’s improvement in credit quality. Net charge-offs were $1.0 million for the second quarter of 2013, or 0.47% of average loans (annualized), compared to $1.5 million, or 0.69% of average loans (annualized), in the second quarter of 2012.

Operating revenue, including net interest income on a fully tax equivalent basis (“FTE”) plus noninterest income from operations, was $12.2 million for the second quarter of 2013, which was down $397,000, or 3.1%, from the second quarter of the prior year. The net interest margin (FTE) for the second quarter of 2013 was 3.20%, a decline of 3 basis points compared to the first quarter 2013, and a decline of 41 basis points from the 2012 second quarter.

Total assets at June 30, 2013 were $1.22 billion, up $10.3 million, or 0.9%, from June 30, 2012. Total deposits at June 30, 2013 were $1.04 billion, up $15.7 million, or 1.5%, from June 30, 2012.

About LNB Bancorp, Inc.

LNB Bancorp, Inc. is a $1.2 billion bank holding company. Its major subsidiary, The Lorain National Bank, is a full-service commercial bank, specializing in commercial, personal banking services, residential mortgage lending and investment and trust services. The Lorain National Bank and its Morgan Bank division serve customers through 20 retail-banking locations and 28 ATMs in Lorain, Erie, Cuyahoga and Summit counties. North Coast Community Development Corporation is a wholly owned subsidiary of The Lorain National Bank. For more information about LNB Bancorp, Inc., and its related products and services or to view its filings with the Securities and Exchange Commission, visit us at http://www.4lnb.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Terms such as "will," "should," "plan," "intend," "expect," "continue," "believe," "anticipate" and "seek," as well as similar comments, are forward-looking in nature. Actual results and events may differ materially from those expressed or anticipated as a result of risks and uncertainties which include but are not limited to: a worsening of economic conditions or slowing of any economic recovery, which could negatively impact, among other things, business activity and consumer spending and could lead to a lack of liquidity in the credit markets; changes in the interest rate environment which could reduce anticipated or actual margins; increases in interest rates or further weakening of economic conditions that could constrain borrowers’ ability to repay outstanding loans or diminish the value of the collateral securing those loans; market conditions or other events that could negatively affect the level or cost of funding, affecting the Company’s ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, and fund asset growth, and new business transactions at a reasonable cost, in a timely manner and without adverse consequences; changes in political conditions or the legislative or regulatory environment, including new or heightened legal standards and regulatory requirements, practices or expectations, which may impede profitability or affect the Company’s financial condition (such as, for example, the Dodd-Frank Act and rules and regulations that have been or may be promulgated under the Act); persisting volatility and limited credit availability in the financial markets, particularly if market conditions limit the Company’s ability to raise funding to the extent required by banking regulators or otherwise; significant increases in competitive pressure in the banking and financial services industries, particularly in the geographic or business areas in which the Company conducts its operations; limitations on the Company’s ability to return capital to shareholders, including the ability to pay dividends, and the dilution of the Company’s common shares that may result from, among other things, funding any repurchase or redemption of the Company’s outstanding preferred stock; adverse effects on the Company’s ability to engage in routine funding transactions as a result of the actions and commercial soundness of other financial institutions; general economic conditions becoming less favorable than expected, continued disruption in the housing markets and/or asset price deterioration, which have had and may continue to have a negative effect on the valuation of certain asset categories represented on the Company’s balance sheet; increases in deposit insurance premiums or assessments imposed on the Company by the FDIC; a failure of the Company’s operating systems or infrastructure, or those of its third-party vendors, that could disrupt its business; risks that are not effectively identified or mitigated by the Company’s risk management framework; and difficulty attracting and/or retaining key executives and/or relationship managers at compensation levels necessary to maintain a competitive market position; as well as the risks and uncertainties described from time to time in the Company’s reports as filed with the SEC. The Company undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

   
CONSOLIDATED BALANCE SHEETS
 
At June 30, 2013 At December 31, 2012
(unaudited)
(Dollars in thousands except share amounts)
ASSETS
Cash and due from Banks $ 36,663 $ 24,139
Federal funds sold and interest bearing deposits in banks   12,871     6,520  
Cash and cash equivalents 49,534 30,659
Securities Available for sale, at fair value   228,766     203,763  
Total securities 228,766 203,763
Restricted stock 5,741 5,741
Loans held for sale 3,423 7,634
Loans:
Portfolio loans 882,896 882,548
Allowance for loan losses   (17,815 )   (17,637 )
Net loans   865,081     864,911  
Bank premises and equipment, net 8,456 8,721
Other real estate owned 1,149 1,366
Bank owned life insurance 18,948 18,611
Goodwill, net 21,582 21,582
Intangible assets, net 527 594
Accrued interest receivable 3,896 3,726
Other assets   11,143     10,946  
Total Assets $ 1,218,246   $ 1,178,254  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Demand and other noninterest-bearing $ 138,728 $ 139,894
Savings, money market and interest-bearing demand 396,070 377,287
Certificates of deposit   504,481     482,411  
Total deposits   1,039,279     999,592  
Short-term borrowings 1,859 1,115
Federal Home Loan Bank advances 46,607 46,508
Junior subordinated debentures 16,238 16,238
Accrued interest payable 825 882
Accrued taxes, expenses and other liabilities   4,544     3,775  
Total Liabilities   1,109,352     1,068,110  
Shareholders' Equity

Preferred stock, Series A Voting, no par value, authorized 150,000 shares at June 30, 2013 and December 31, 2012.

- -
Fixed rate cumulative preferred stock, Series B, no par value, $1,000 liquidation value, 9,147 shares authorized and issued at June 30, 2013 and 18,880 shares at December 31, 2012. 9,147 18,880
Discount on Series B preferred stock (27 ) (65 )

Common stock, par value $1 per share, authorized 15,000,000 shares, issued shares 9,631,896 at June 30, 2013 and 8,272,548 at December 31, 2012.

9,632 8,273
Additional paid-in capital 47,661 39,141
Retained earnings 51,164 48,767
Accumulated other comprehensive income (2,591 ) 1,240
Treasury shares at cost, 328,194 shares at June 30, 2013 and at December 31, 2012   (6,092 )   (6,092 )
Total Shareholders' Equity   108,894     110,144  
Total Liabilities and Shareholders' Equity $ 1,218,246   $ 1,178,254  
 
Consolidated Statements of Income (unaudited)
     
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
June 30, June 30, June 30, June 30,

2013

2012

2013

2012

(Dollars in thousands except share and per share amounts)
 
Interest Income
Loans $ 9,264 $ 10,194 $ 18,318 $ 20,243
Securities:
U.S. Government agencies and corporations 867 1,281 1,708 2,541
State and political subdivisions 298 291 586 578
Other debt and equity securities 138 69 222 141
Federal funds sold and short-term investments   9     10     16     19  
Total interest income 10,576 11,845 20,850 23,522
 
Interest Expense
Deposits 1,236 1,527 2,485 3,158
Federal Home Loan Bank advances 157 212 311 427
Short-term borrowings - - 1 -
Junior subordinated debenture   174     173     340     349  
Total interest expense   1,567     1,912     3,137     3,934  
Net Interest Income 9,009 9,933 17,713 19,588
Provision for Loan Losses   1,050     1,667     2,400     3,567  
Net interest income after provision for loan losses 7,959 8,266 15,313 16,021
 
Noninterest Income
Investment and trust services 440 425 815 815
Deposit service charges 869 929 1,685 1,864
Other service charges and fees 808 804 1,639 1,552
Income from bank owned life insurance 170 169 338 334
Other income   232     58     553     400  
Total fees and other income 2,519 2,385 5,030 4,965
Securities gains, net - - 178 -
Gains on sale of loans 587 205 1,243 552
Loss on sale of other assets, net   (34 )   (47 )   (47 )   (99 )
Total noninterest income 3,072 2,543 6,404 5,418
 
Noninterest Expense
Salaries and employee benefits 4,224 3,894 9,251 8,005
Furniture and equipment 1,134 1,200 2,083 2,270
Net occupancy 549 554 1,137 1,133
Professional fees 586 564 1,076 1,059
Marketing and public relations 349 395 638 642
Supplies, postage and freight 274 265 581 508
Telecommunications 175 172 337 345
Ohio Franchise tax 302 307 610 623
FDIC assessments 238 394 480 786
Other real estate owned 48 175 125 307
Loan and collection expense 374 308 762 657
Other expense   369     819     823     1,256  
Total noninterest expense   8,622     9,047     17,903     17,591  
Income before income tax expense 2,409 1,762 3,814 3,848
Income tax expense   586     324     878     905  
Net Income $ 1,823   $ 1,438   $ 2,936   $ 2,943  
Dividends and accretion on preferred stock   117     318     374     637  
Net Income Available to Common Shareholders $ 1,706   $ 1,120   $ 2,562   $ 2,306  
 
Net Income Per Common Share
Basic $ 0.18 $ 0.14 $ 0.29 $ 0.29
Diluted 0.18 0.14 0.29 0.29
Dividends declared 0.01 0.01 0.02 0.02
Average Common Shares Outstanding
Basic 9,303,702 7,944,354 8,755,457 7,934,458
Diluted 9,319,142 7,950,528 8,769,291 7,938,383
 
LNB Bancorp, Inc.
Supplemental Financial Information
(Unaudited - Dollars in thousands except Share and Per Share Data)
             
Three Months Ended Six Months Ended
June 30, March 31, December 31, June 30, June 30, June 30,
END OF PERIOD BALANCES   2013   2013   2012   2012 2013   2012
Cash and Cash Equivalents $ 49,534 $ 54,954 $ 30,659 $ 56,619 $ 49,534 $ 56,619
Securities 228,766 223,173 203,763 228,788 228,766 228,788
Restricted stock 5,741 5,741 5,741 5,741 5,741 5,741
Loans held for sale 3,423 6,250 7,634 1,207 3,423 1,207
Portfolio loans 882,896 889,931 882,548 867,459 882,896 867,459
Allowance for loan losses   17,815     17,806     17,637     17,300     17,815     17,300  
Net loans 865,081 872,125 864,911 850,159 865,081 850,159
Other assets   65,701     68,940     65,546     65,431     65,701     65,431  
Total assets $ 1,218,246   $ 1,231,183   $ 1,178,254   $ 1,207,945   $ 1,218,246   $ 1,207,945  
Total deposits 1,039,279 1,049,176 999,593 1,023,553 1,039,279 1,023,553
Other borrowings 64,704 64,684 63,861 64,560 64,704 64,560
Other liabilities   5,369     7,118     4,656     4,295     5,369     4,295  
Total liabilities 1,109,352 1,120,978 1,068,110 1,092,408 1,109,352 1,092,408
Total shareholders' equity   108,894     110,205     110,144     115,537     108,894     115,537  
Total liabilities and shareholders' equity $ 1,218,246   $ 1,231,183   $ 1,178,254   $ 1,207,945   $ 1,218,246   $ 1,207,945  
 
AVERAGE BALANCES
Assets:
Total assets $ 1,233,694 $ 1,195,633 $ 1,198,845 $ 1,206,297 $ 1,214,767 $ 1,191,376
Earning assets* $ 1,147,869 $ 1,113,292 1,124,703 1,122,918 1,130,676 1,108,268
Securities $ 225,644 $ 207,791 224,876 226,476 217,207 224,654
Portfolio loans 882,499 884,893 883,228 866,909 883,689 859,722
Liabilities and shareholders' equity:
Total deposits $ 1,053,952 $ 1,016,968 $ 1,013,808 $ 1,022,428 $ 1,035,562 $ 1,008,133
Interest bearing deposits $ 914,652 $ 879,208 870,551 885,922 897,028 877,514
Interest bearing liabilities $ 979,260 $ 943,566 935,239 950,647 961,512 941,840
Total shareholders' equity 110,619 110,416 116,573 115,281 110,518 114,718
 
INCOME STATEMENT
Total Interest Income $ 10,576 $ 10,274 $ 10,920 $ 11,845 $ 20,850 $ 23,522
Total Interest Expense   1,567     1,570     1,732     1,912     3,137     3,934  
Net interest income 9,009 8,704 9,188 9,933 17,713 19,588
Provision for loan losses 1,050 1,350 1,800 1,667 2,400 3,567
Other income 2,519 2,511 2,598 2,385 5,030 4,965
Net gain on sale of assets 553 821 778 158 1,374 453
Noninterest expense   8,622     9,281     8,634     9,047     17,903     17,591  
Income before income taxes 2,409 1,405 2,130 1,762 3,814 3,848
Income tax expense   586     292     491     324     878     905  
Net income 1,823 1,113 1,639 1,438 2,936 2,943
Preferred stock dividend and accretion   117     257     310     318     374     637  
Net income available to common shareholders $ 1,706   $ 856   $ 1,329   $ 1,120   $ 2,562   $ 2,306  
Common cash dividend declared and paid $ 93   $ 79   $ 79   $ 79   $ 172   $ 158  
 
Net interest income-FTE (1) $ 9,169 $ 8,860 $ 9,339 $ 10,095 $ 18,029 $ 19,903
Total Operating Revenue (4) $ 12,241 $ 12,192 $ 12,715 $ 12,638 $ 24,433 $ 25,321
 
 
Three Months Ended Six Months Ended
June 30, March 31, December 31, June 30, June 30, June 30,
    2013   2013   2012   2012 2013   2012
PER SHARE DATA
Basic net income per common share $ 0.18 $ 0.10 $ 0.17 $ 0.14 $ 0.29 $ 0.29
Diluted net income per common share 0.18 0.10 0.17 0.14 0.29 0.29
Cash dividends per common share 0.01 0.01 0.01 0.01 0.02 0.02
Book value per common shares outstanding 10.36 10.87 11.50 11.38 10.36 11.38
Tangible book value per common shares outstanding** 8.06 8.49 8.70 8.58 8.06 8.58
Period-end common share market value 8.59 8.31 5.90 6.58 8.59 6.58
Market as a % of tangible book 106.53 % 97.93 % 67.82 % 76.69 % 106.53 % 76.69 %
Basic average common shares outstanding 9,303,702 8,201,120 7,944,354 7,944,354 8,755,457 7,934,458
Diluted average common shares outstanding 9,319,142 8,212,038 7,949,556 7,950,528 8,769,291 7,938,383
Common shares outstanding 9,631,896 9,303,702 7,944,354 7,944,354 9,631,896 7,944,354
 
KEY RATIOS
Return on average assets (2) 0.59 % 0.38 % 0.54 % 0.48 % 0.49 % 0.50 %
Return on average common equity (2) 6.61 % 4.09 % 5.59 % 5.02 % 5.36 % 5.16 %
Efficiency ratio 70.44 % 76.12 % 67.90 % 71.59 % 73.27 % 69.47 %
Noninterest expense to average assets (2) 2.80 % 3.15 % 2.87 % 3.02 % 2.97 % 2.97 %
Average equity to average assets 8.97 % 9.23 % 9.72 % 9.56 % 9.10 % 9.63 %
Net interest margin (FTE) (1) 3.20 % 3.23 % 3.30 % 3.61 % 3.22 % 3.61 %
Common stock dividend payout ratio 5.46 % 9.59 % 5.88 % 7.10 % 6.83 % 6.88 %
Common stock market capitalization $ 82,738 $ 77,314 $ 46,872 $ 52,274 $ 82,738 $ 52,274
Tangible common equity ratio 6.49 % 6.52 %
 
ASSET QUALITY
Allowance for Loan Losses
Allowance for loan losses, beginning of period $ 17,806 $ 17,637 $ 17,587 $ 17,115 17,637 17,063
Provision for loan losses 1,050 1,350 1,800 1,667 2,400 3,567
Charge-offs 1,667 1,428 2,201 1,621 3,095 3,697
Recoveries   626     247     451     139     873     367  
Net charge-offs   1,041     1,181     1,750     1,482     2,222     3,330  
Allowance for loan losses, end of period $ 17,815   $ 17,806   $ 17,637   $ 17,300   $ 17,815   $ 17,300  
 
Nonperforming Assets
Nonperforming loans $ 26,605 $ 28,514 $ 27,796 $ 34,993 $ 26,605 $ 34,993
Other real estate owned   1,149     1,215     1,366     1,506     1,149     1,506  
Total nonperforming assets $ 27,754   $ 29,729   $ 29,162   $ 36,499   $ 27,754   $ 36,499  
 
Ratios
Total nonperforming loans to total loans 3.01 % 3.20 % 3.15 % 4.03 % 3.01 % 4.03 %
Total nonperforming assets to total assets 2.28 % 2.41 % 2.48 % 3.02 % 2.28 % 3.02 %
Net charge-offs to average loans (2) 0.47 % 0.54 % 0.79 % 0.69 % 0.51 % 0.78 %
Provision for loan losses to average loans (2) 0.48 % 0.62 % 0.81 % 0.77 % 0.55 % 0.83 %
Allowance for loan losses to portfolio loans 2.02 % 2.00 % 2.00 % 1.99 % 2.02 % 1.99 %
Allowance to nonperforming loans 66.96 % 62.45 % 63.45 % 49.44 % 66.96 % 49.44 %
Allowance to nonperforming assets 64.19 % 59.89 % 60.48 % 47.40 % 64.19 % 47.40 %
 
CAPITAL & LIQUIDITY
Period-end tangible common equity to assets** 6.49 % 6.53 % 5.98 % 5.73 % 6.49 % 5.73 %
Average equity to assets 8.97 % 9.23 % 9.72 % 9.56 % 9.10 % 9.58 %
Average equity to loans 12.53 % 12.48 % 13.20 % 13.30 % 12.51 % 13.34 %
Average loans to deposits 83.73 % 87.01 % 87.12 % 84.79 % 85.33 % 85.28 %
Tier 1 leverage ratio (3) 8.73 % 8.88 % 8.79 % 8.78 % 8.73 % 8.80 %
Tier 1 risk-based capital ratio (3) 11.36 % 11.11 % 11.21 % 11.46 % 11.36 % 11.39 %
Total risk-based capital ratio (3) 12.62 % 12.36 % 12.47 % 13.97 % 12.62 % 14.01 %
 
(1) FTE -- fully tax equivalent at 34% tax rate
(2) Annualized
(3) 6-30-13 ratio is estimated.
(4) Net interest income on a fully tax-equivalent basis ("FTE") plus noninterest income from operations
* Earning Assets includes Loans Held for Sale

** Non-GAAP measures.

Reconciliation of Pre-Provision Core Earnings*
           
Three Months Ended Six Months Ended
June 30, June 30,
 

2013

2012

2013

2012

 
Pre-provision Core Earnings* $ 3,459 $ 3,429 $ 6,214 $ 7,415
Provision for Loan Losses   1,050   1,667   2,400   3,567
Income before income tax expense $ 2,409 $ 1,762 $ 3,814 $ 3,848
* Pre-provision core earnings is a non-GAAP financial measure that the Company’s management believes is useful in analyzing the Company’s underlying performance trends, particularly in periods of economic stress. Pre-provision core earnings is defined as income before income tax expense, adjusted to exclude the impact of provision for loan losses.

CONTACT:
LNB Bancorp, Inc.
Peter. R. Catanese, Senior Vice President, 440-244-7126

Stock widget

Investing forum

LNB BANCORP INC Reports