Exhibit 99.1
LNB Bancorp, Inc. Reports Third Quarter 2009 Results
- Net interest income increases 16 percent 3Q09 vs. 3Q08
- Significant loan loss provision taken
- LNB takes market share lead in Lorain County
LORAIN, Ohio--(BUSINESS WIRE)--October 30, 2009--LNB Bancorp, Inc. (NASDAQ: LNBB) today reported a net loss of $4,376,000 or $.64 per share for the three months ended September 30, 2009, compared with net income of $1,823,000 or $.25 per diluted share reported for the same period a year ago.
“A significant loan loss provision recorded in the third quarter impacted our net earnings,” said Daniel E. Klimas, president and chief executive officer of LNB Bancorp. “The pre-provision core earnings* performance for the third quarter was highly impressive with solid revenue gains. Net interest income increased by more than 16 percent in the third quarter this year compared to the third quarter a year ago.”
Pre-provision core earnings* equaled $3,965,000 for the third quarter of 2009 compared to $2,889,000 for the third quarter a year ago, an increase of 37.2 percent. Pre-provision core earnings* for the first nine months of 2009 were $10,258,000, compared with $7,674,000 for the first nine months of 2008, an increase of 33.7 percent.
Asset quality issues continue to pose challenges for the industry. The company recorded a loan loss provision of $11,067,000 in the third quarter of 2009 as a result of an increase in problem loans and declining values of collateral in real estate loans in the third quarter of 2009.
“We feel that this provision is a prudent business decision that will help ensure that potential losses are appropriately covered,” said Klimas. “Our pre-provision core earnings* performance continues to demonstrate the strength of our company.” Klimas added that the current economic environment remains challenging. “We continue to be vigilant as we manage through these uncertain economic conditions," he said.
“One positive sign of the strength of our core business is found in the most recent FDIC report on deposit market share,” said Klimas. “For the first time in 15 years, Lorain National Bank has taken the No. 1 position in market share in Lorain County. Such an achievement is testimony of our continued focus on growing our business and the dedication and hard work of our associates.”
Total deposits at the end of the third quarter this year were $968,991,000, up from $895,662,000 at the end of last year’s third quarter. Total assets at the end of the third quarter 2009 were $1,181,179,000 compared with $1,109,501,000 at the end of the third quarter of 2008. Total portfolio loans at September 30, 2009 were $813,600,000, up from $793,542,000 at September 30, 2008.
For the first nine months of 2009, the company reported a net loss of $2,543,000, or $.48 per share, compared with net income of $2,135,000 or $.29 per diluted share for the same period a year ago. Net loss available to common shareholders was $4,695,000 for the third quarter of 2009 and $3,480,000 for the first nine months of 2009.
Key Performance Measures
Net interest income for the third quarter of 2009 was $9,578,000, a 16 percent increase compared with net interest income of $8,229,000 for the third quarter a year ago and 4.9 percent higher than the net interest income of $9,134,000 in the second quarter of 2009. For the first nine months of 2009, net interest income was $27,610,000, compared to $23,888,000 in the first nine months of 2008, a 15.5 percent increase.
The bank’s net interest margin on a fully tax-equivalent basis rose slightly to 3.30 percent in the third quarter this year from 3.28 percent in the second quarter 2009 and up from 3.28 in the third quarter a year ago.
Noninterest income was $3,124,000 for the third quarter of 2009, down slightly from $3,158,000 in the third quarter a year ago. Investment and trust service income and other fees showed increases in comparison to recent quarters when such income had been slowed by the downturn in stock market activity.
Noninterest expense was $8,737,000 for the third quarter of 2009, compared to $8,498,000 in the third quarter of 2008 and $9,480,000 in the second quarter of 2009. Expenses were significantly impacted by a $566,000 increase in FDIC fees in the third quarter of 2009, compared to the same quarter last year.
In terms of asset quality, the allowance for loan losses at September 30, 2009 was $22,556,000 or 2.77 percent of outstanding loans. Net charge-offs for the third quarter of 2009 were $1,489,000, compared with $990,000 in the third quarter a year ago and $1,081,000 for the second quarter of 2009. The allowance to nonperforming loans was 53.68 percent at September 30, 2009, up from 39.17 percent at June 30, 2009.
* 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. Pre-provision core earnings is reconciled to the related GAAP financial measure in the “Reconciliation” table included after the consolidated financial statements and supplemental financial information included in this press release.
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 Morgan Bank serve customers through 21 retail-banking locations and 28 ATMs in Lorain, eastern Erie, western Cuyahoga and Summit counties. North Coast Community Development Corporation is a wholly owned subsidiary of The Lorain National Bank. Brokerage services are provided by the bank through an agreement with Investment Centers of America. 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.
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 expressions, 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 significant increases in competitive pressure in the banking and financial services industries; changes in the interest rate environment which could reduce anticipated or actual margins; 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; persisting volatility and limited credit availability in the financial markets, particularly if initiatives undertaken by the U.S. government do not have the intended effect on the financial markets; limitations on the Company’s ability to raise funding to the extent required by banking regulators or otherwise; limitations on the Company’s ability to return capital to shareholders and dilution of the Company’s common shares that may result from the terms of the Capital Purchase Program (“CPP”), pursuant to which the Company issued securities to the United States Department of the Treasury (the “U.S. Treasury”); increases in interest rates or further weakening economic conditions that could constrain borrowers’ ability to repay outstanding loans or diminish the value of the collateral securing those loans; 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; asset price deterioration, which has had and may continue to have a negative effect on the valuation of certain asset categories represented on the Company’s balance sheet; general economic conditions, either nationally or regionally (especially in northeastern Ohio), becoming less favorable than expected resulting in, among other things, a deterioration in credit quality of assets; increases in deposit insurance premiums or assessments imposed on the Company by the FDIC; difficulty attracting and/or retaining key executives and/or relationship managers at compensation levels necessary to maintain a competitive market position; changes occurring in business conditions and inflation; changes in technology; changes in trade, monetary, fiscal and tax policies; changes in the securities markets, in particular, continued disruption in the fixed income markets and adverse capital market conditions; continued disruption in the housing markets and related conditions in the financial markets; and changes in general economic conditions and competition in the geographic and business areas in which the Company conducts its operations, particularly in light of the recent consolidation of competing financial institutions; as well as the risks and uncertainties described from time to time in the Company’s reports as filed with the Securities and Exchange Commission.. We undertake no obligation to review or update any forward-looking statements, whether as a result of new information, future events or otherwise.
CONSOLIDATED BALANCE SHEETS | ||||||||
At September 30, 2009 | At December 31, 2008 | |||||||
(unaudited) | ||||||||
(Dollars in thousands except share amounts) | ||||||||
ASSETS | ||||||||
Cash and due from Banks | $ | 18,670 | $ | 21,723 | ||||
Federal funds sold and short-term investments | 16,004 | 15,200 | ||||||
Cash and cash equivalents | 34,674 | 36,923 | ||||||
Interest-bearing deposits in other banks | 357 | 352 | ||||||
Securities: | ||||||||
Trading securities, at fair value | 8,865 | 11,261 | ||||||
Available for sale, at fair value | 273,144 | 223,052 | ||||||
Total Securities | 282,009 | 234,313 | ||||||
Restricted stock | 4,985 | 4,884 | ||||||
Loans held for sale | 1,707 | 3,580 | ||||||
Loans: | ||||||||
Portfolio loans | 813,600 | 803,551 | ||||||
Allowance for loan losses | (22,556 | ) | (11,652 | ) | ||||
Net loans | 791,044 | 791,899 | ||||||
Bank premises and equipment, net | 10,311 | 11,504 | ||||||
Other real estate owned | 1,071 | 1,108 | ||||||
Bank owned life insurance | 16,282 | 15,742 | ||||||
Goodwill, net | 21,582 | 21,582 | ||||||
Intangible assets, net | 1,040 | 1,142 | ||||||
Accrued interest receivable | 4,337 | 4,290 | ||||||
Other assets | 11,780 | 8,816 | ||||||
Total Assets | $ | 1,181,179 | $ | 1,136,135 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Deposits | ||||||||
Demand and other noninterest-bearing | $ | 93,200 | $ | 93,994 | ||||
Savings, money market and interest-bearing demand | 290,553 | 292,679 | ||||||
Certificates of deposit | 585,238 | 534,502 | ||||||
Total deposits | 968,991 | 921,175 | ||||||
Short-term borrowings | 31,422 | 22,928 | ||||||
Federal Home Loan Bank advances | 43,005 | 53,357 | ||||||
Junior subordinated debentures | 20,620 | 20,620 | ||||||
Accrued interest payable | 2,820 | 3,813 | ||||||
Accrued taxes, expenses and other liabilities | 9,323 | 7,183 | ||||||
Total Liabilities | 1,076,181 | 1,029,076 | ||||||
Shareholders' Equity | ||||||||
Preferred Shares, Series A Voting, no par value, authorized 750,000 shares, none issued at September 30, 2009 and December 31, 2008 | - | - | ||||||
Preferred stock, Series B, no par value, 25,223 shares authorized and issued at September 30, 2009 and December 31, 2008 | 25,223 | 25,223 | ||||||
Discount on Series B preferred stock | (134 | ) | (146 | ) | ||||
Warrant to purchase common stock | 146 | 146 | ||||||
Common stock, par value $1 per share, authorized 15,000,000 shares, issued shares 7,623,857 at September 30, 2009 and December 31, 2008 | 7,624 | 7,624 | ||||||
Additional paid-in capital | 37,852 | 37,783 | ||||||
Retained earnings | 36,733 | 41,682 | ||||||
Accumulated other comprehensive income | 3,646 | 839 | ||||||
Treasury shares at cost, 328,194 shares at September 30, 2009 and at December 31, 2008 | (6,092 | ) | (6,092 | ) | ||||
Total Shareholders' Equity | 104,998 | 107,059 | ||||||
Total Liabilities and Shareholders' Equity | $ | 1,181,179 | $ | 1,136,135 | ||||
Consolidated Statements of Income (unaudited) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||||
(Dollars in thousands except share and per share amounts) | |||||||||||||||
Interest Income | |||||||||||||||
Loans | $ | 11,536 | $ | 11,976 | $ | 34,507 | $ | 36,514 | |||||||
Securities: | |||||||||||||||
U.S. Government agencies and corporations | 2,554 | 1,861 | 7,566 | 5,795 | |||||||||||
State and political subdivisions | 261 | 203 | 760 | 551 | |||||||||||
Trading securities | 88 | 209 | 334 | 738 | |||||||||||
Other debt and equity securities | 65 | 82 | 183 | 214 | |||||||||||
Federal funds sold and short-term investments | 19 | 54 | 52 | 130 | |||||||||||
Total interest income | 14,523 | 14,385 | 43,402 | 43,942 | |||||||||||
Interest Expense | |||||||||||||||
Deposits | 4,326 | 5,135 | 13,829 | 17,041 | |||||||||||
Federal Home Loan Bank advances | 351 | 646 | 1,131 | 1,769 | |||||||||||
Short-term borrowings | 43 | 93 | 111 | 354 | |||||||||||
Junior subordinated debenture | 225 | 282 | 721 | 890 | |||||||||||
Total interest expense | 4,945 | 6,156 | 15,792 | 20,054 | |||||||||||
Net Interest Income | 9,578 | 8,229 | 27,610 | 23,888 | |||||||||||
Provision for Loan Losses | 11,067 | 471 | 15,360 | 5,609 | |||||||||||
Net interest income (loss) after provision for loan losses | (1,489 | ) | 7,758 | 12,250 | 18,279 | ||||||||||
Noninterest Income | |||||||||||||||
Investment and trust services | 496 | 441 | 1,405 | 1,560 | |||||||||||
Deposit service charges | 1,211 | 1,258 | 3,332 | 3,559 | |||||||||||
Other service charges and fees | 766 | 704 | 2,108 | 2,030 | |||||||||||
Income from bank owned life insurance | 213 | 154 | 540 | 735 | |||||||||||
Other income | 51 | 67 | 216 | 736 | |||||||||||
Total fees and other income | 2,737 | 2,624 | 7,601 | 8,620 | |||||||||||
Securities gains, net | 88 | 223 | 674 | 506 | |||||||||||
Gains on sale of loans | 341 | 298 | 963 | 642 | |||||||||||
Gains (loss) on sale of other assets, net | (42 | ) | 13 | (13 | ) | (122 | ) | ||||||||
Total noninterest income | 3,124 | 3,158 | 9,225 | 9,646 | |||||||||||
Noninterest Expense | |||||||||||||||
Salaries and employee benefits | 3,610 | 3,828 | 11,130 | 11,467 | |||||||||||
Furniture and equipment | 1,039 | 1,049 | 3,370 | 3,080 | |||||||||||
Net occupancy | 571 | 556 | 1,785 | 1,816 | |||||||||||
Outside services | 657 | 522 | 2,001 | 1,996 | |||||||||||
Marketing and public relations | 228 | 247 | 767 | 829 | |||||||||||
Supplies, postage and freight | 311 | 408 | 951 | 1,092 | |||||||||||
Telecommunications | 208 | 189 | 596 | 635 | |||||||||||
Ohio Franchise tax | 232 | 225 | 689 | 670 | |||||||||||
FDIC assessments | 743 | 177 | 2,032 | 237 | |||||||||||
Other real estate owned | 89 | 285 | 263 | 892 | |||||||||||
Electronic banking expenses | 209 | 237 | 598 | 747 | |||||||||||
Loan and collection expense | 385 | 256 | 963 | 716 | |||||||||||
Other expense | 455 | 519 | 1,432 | 1,683 | |||||||||||
Total noninterest expense | 8,737 | 8,498 | 26,577 | 25,860 | |||||||||||
Income (loss) before income tax expense (benefit) | (7,102 | ) | 2,418 | (5,102 | ) | 2,065 | |||||||||
Income tax expense (benefit) | (2,726 | ) | 595 | (2,559 | ) | (70 | ) | ||||||||
Net Income (Loss) | $ | (4,376 | ) | $ | 1,823 | $ | (2,543 | ) | $ | 2,135 | |||||
Dividends and accretion on preferred stock | 319 | - | 937 | - | |||||||||||
Net Income (Loss) Available to Common Shareholders | $ | (4,695 | ) | $ | 1,823 | $ | (3,480 | ) | $ | 2,135 | |||||
Net Income (Loss) Per Common Share | |||||||||||||||
Basic | $ | (0.64 | ) | $ | 0.25 | $ | (0.48 | ) | $ | 0.29 | |||||
Diluted | (0.64 | ) | 0.25 | (0.48 | ) | 0.29 | |||||||||
Dividends declared | 0.01 | 0.09 | 0.19 | 0.45 | |||||||||||
Average Common Shares Outstanding | |||||||||||||||
Basic | 7,295,663 | 7,295,663 | 7,295,663 | 7,295,663 | |||||||||||
Diluted | 7,295,663 | 7,295,663 | 7,295,663 | 7,295,663 |
LNB Bancorp, Inc. | ||||||||||||||||||||
Supplemental Financial Information | ||||||||||||||||||||
(Unaudited - Dollars in thousands except Share and Per Share Data) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
END OF PERIOD BALANCES | ||||||||||||||||||||
Assets | $ | 1,181,179 | $ | 1,232,095 | $ | 1,109,501 | $ | 1,181,179 | $ | 1,109,501 | ||||||||||
Deposits | 968,991 | 1,014,724 | 895,662 | 968,991 | 895,662 | |||||||||||||||
Portfolio loans | 813,600 | 803,549 | 793,542 | 813,600 | 793,542 | |||||||||||||||
Allowance for loan losses | 22,556 | 12,978 | 11,355 | 22,556 | 11,355 | |||||||||||||||
Shareholders' equity | 104,998 | 107,679 | 80,340 | 104,998 | 80,340 | |||||||||||||||
AVERAGE BALANCES | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Total assets | $ | 1,236,055 | $ | 1,202,197 | $ | 1,082,869 | $ | 1,202,958 | $ | 1,064,967 | ||||||||||
Earning assets | 1,169,229 | 1,133,466 | 1,010,388 | 1,134,258 | 989,045 | |||||||||||||||
Securities | 350,352 | 325,030 | 219,642 | 322,550 | 218,246 | |||||||||||||||
Total loans | 818,877 | 808,436 | 790,746 | 811,708 | 763,577 | |||||||||||||||
Liabilities and shareholders' equity: | ||||||||||||||||||||
Total deposits | $ | 1,018,968 | $ | 995,775 | $ | 870,622 | $ | 988,443 | $ | 863,643 | ||||||||||
Interest bearing deposits | 924,479 | 903,018 | 783,264 | 895,861 | 777,790 | |||||||||||||||
Interest bearing liabilities | 1,021,900 | 990,496 | 907,753 | 991,361 | 885,453 | |||||||||||||||
Total shareholders' equity | 108,307 | 108,255 | 79,292 | 108,091 | 83,532 | |||||||||||||||
INCOME STATEMENT | ||||||||||||||||||||
Net interest income | $ | 9,578 | $ | 9,134 | $ | 8,229 | $ | 27,610 | $ | 23,888 | ||||||||||
Net interest income-FTE (1) | 9,714 | 9,274 | 8,342 | 28,006 | 24,202 | |||||||||||||||
Provision for loan losses | 11,067 | 2,484 | 471 | 15,360 | 5,609 | |||||||||||||||
Noninterest income | 3,124 | 3,244 | 3,158 | 9,225 | 9,646 | |||||||||||||||
Noninterest expense | 8,737 | 9,480 | 8,498 | 26,577 | 25,860 | |||||||||||||||
Taxes | (2,726 | ) | (102 | ) | 595 | (2,559 | ) | (70 | ) | |||||||||||
Net income (loss) | (4,376 | ) | 516 | 1,823 | (2,543 | ) | 2,135 | |||||||||||||
Less Preferred stock dividend and accretion | 319 | 319 | - | 937 | - | |||||||||||||||
Net income (loss) available to common shareholders | (4,695 | ) | 197 | 1,823 | (3,480 | ) | 2,135 | |||||||||||||
PER SHARE DATA | ||||||||||||||||||||
Basic net income (loss) per common share | $ | (0.64 | ) | $ | 0.03 | $ | 0.25 |
| $ | (0.48 | ) | $ | 0.29 | |||||||
Diluted net income (loss) per common share | (0.64 | ) | 0.03 | 0.25 | (0.48 | ) | 0.29 | |||||||||||||
Cash dividends per common share | 0.01 | 0.09 | 0.09 | 0.19 | 0.45 | |||||||||||||||
Basic average common shares outstanding | 7,295,663 | 7,295,663 | 7,295,663 | 7,295,663 | 7,295,663 | |||||||||||||||
Diluted average common shares outstanding | 7,295,663 | 7,295,663 | 7,295,663 | 7,295,663 | 7,295,663 | |||||||||||||||
KEY RATIOS | ||||||||||||||||||||
Return on average assets (2) | -1.40 | % | 0.17 | % | 0.67 | % | -0.28 | % | 0.27 | % | ||||||||||
Return on average common equity (2) | -16.03 | % | 1.91 | % | 9.15 | % | -3.15 | % | 3.48 | % | ||||||||||
Efficiency ratio | 68.06 | % | 75.73 | % | 73.90 | % | 71.38 | % | 76.40 | % | ||||||||||
Noninterest expense to average assets (2) | 2.80 | % | 3.16 | % | 3.12 | % | 2.95 | % | 3.23 | % | ||||||||||
Average equity to average assets | 8.76 | % | 9.00 | % | 7.32 | % | 8.99 | % | 7.66 | % | ||||||||||
Net interest margin | 3.25 | % | 3.23 | % | 3.24 | % | 3.25 | % | 3.20 | % | ||||||||||
Net interest margin (FTE) (1) | 3.30 | % | 3.28 | % | 3.28 | % | 3.30 | % | 3.24 | % | ||||||||||
ASSET QUALITY | ||||||||||||||||||||
Nonperforming loans | $ | 42,018 | $ | 33,133 | $ | 17,445 | $ | 42,018 | $ | 17,445 | ||||||||||
Other real estate owned | 1,071 | 1,170 | 1,799 | 1,071 | 1,799 | |||||||||||||||
Total nonperforming assets | 43,089 | 34,303 | 19,244 | 43,089 | 19,244 | |||||||||||||||
Net Charge Offs | 1,489 | 1,081 | 990 | 4,456 | 2,074 | |||||||||||||||
Total nonperforming loans to total loans | 5.16 | % | 4.12 | % | 2.20 | % | 5.16 | % | 2.20 | % | ||||||||||
Total nonperforming assets to total assets | 3.65 | % | 2.78 | % | 1.73 | % | 3.65 | % | 1.73 | % | ||||||||||
Net charge-offs to average loans (2) | 0.72 | % | 0.54 | % | 0.50 | % | 0.73 | % | 0.36 | % | ||||||||||
Allowance for loan losses | 2.77 | % | 1.62 | % | 1.43 | % | 2.77 | % | 1.43 | % | ||||||||||
Allowance to nonperforming loans | 53.68 | % | 39.17 | % | 65.09 | % | 53.68 | % | 65.09 | % | ||||||||||
(1) FTE -- fully tax equivalent at 34% tax rate | ||||||||||||||||||||
(2) Annualized | ||||||||||||||||||||
Reconciliation of Pre-Provision Core Earnings* | |||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||
Pre-provision Core Earnings* | $ | 3,965 | $ | 2,889 | $ | 10,258 | $ | 7,674 | |||||
Provision for Loan Losses | 11,067 | 471 | 15,360 | 5,609 | |||||||||
Income (loss) before income tax expense (benefit) | (7,102 | ) | 2,418 | (5,102 | ) | 2,065 | |||||||
* 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:
For LNB Bancorp, Inc.
W. John Fuller, 216-978-7643