Exhibit 99.1
LNB Bancorp, Inc. Reports Profitable 2009 Fourth Quarter
- Fourth quarter 2009 net interest income up 22.6 percent from the previous year
- Net interest margin shows improvement to 3.70 percent
LORAIN, Ohio--(BUSINESS WIRE)--January 28, 2010--LNB Bancorp, Inc. (NASDAQ:LNBB) today reported financial results for the fourth quarter and full year ended December 31, 2009. Net income for the fourth quarter of 2009 was $542,000 compared to $1,261,000 for fourth quarter of 2008. Diluted earnings per share available to common shareholders for the fourth quarter of 2009 was $0.03 compared to $0.16 for the fourth quarter of 2008.
“While still impacted by the economic downturn, we are pleased to report that LNB had a profitable fourth quarter of 2009 with increases in net interest income and total deposits over the same quarter in 2008,” said Daniel E. Klimas, president and chief executive officer of LNB Bancorp, Inc.
“We continued to make significant, but appropriate, provisions for loan losses,” said Klimas. “However, our pre-provision core earnings* were $4,090,000 in the fourth quarter of 2009, an increase of 54.7 percent from the $2,643,000 in the fourth quarter of 2008.” Net interest income was up 22.6 percent in the fourth quarter of 2009 over the fourth quarter of 2008.
“We believe this impressive core earnings performance was achieved primarily because of the strategic investments we made over the past several years to expand in targeted areas of Lorain County, expand our capability to serve small-to medium-size businesses and to acquire Morgan Bank in Hudson,” said Klimas.
“Another positive outcome from our investment strategy was that in 2009 Lorain National Bank became the No. 1 bank in terms of deposit market share in Lorain County, according to Federal Deposit Insurance Corporation (FDIC) statistics,” said Klimas. This is the first time LNB has had the No. 1 ranking in more than 15 years.
“We still face challenges in terms of the struggling economy, but we believe we are well-positioned as the economy improves,” said Klimas. “While it is difficult to predict what the year 2010 will hold, we continue to focus on growing revenue, managing our expenses and aggressively addressing credit quality issues.”
Fourth Quarter Review
Fourth quarter 2009 net interest income totaled $10.1 million, up 22.6 percent from $8.3 million for the fourth quarter of 2008 and up from the $9.6 million in the third quarter of 2009.
The Company’s net interest margin for the fourth quarter of 2009 was 3.70 percent, an appreciable increase from the 3.19 percent in the fourth quarter of 2008 and 3.30 percent in the third quarter of 2009. This was the most dramatic quarter-to-quarter increase in more than two years and very encouraging in light of the fact that market interest rates remained at their lowest levels in many years.
Noninterest income was $2.7 million for the fourth quarter of 2009, compared to $2.8 million in the fourth quarter of 2008. Investment and trust services fees continued to show improvement, a sign of improved market activity from a year ago.
Noninterest expense was $8.8 million for the fourth quarter of 2009 compared to $8.4 million for the fourth quarter of 2008. A large portion of the increase was due to the increased FDIC insurance premiums imposed this year. Expenses were essentially flat from the third to fourth quarter in 2009.
Total deposits at the end of the fourth quarter of 2009 stood at $971.4 million, a more than $50 million increase from the $921.2 million at end of 2008.
Due to the continuing pressure on asset quality, the provision for loan losses was $3,657,000 in the fourth quarter 2009, compared to $1,200,000 for the fourth quarter of 2008. Net charge-offs were $7,421,000 in the fourth quarter of 2009, compared to $1,489,000 in the third quarter of 2009 and $903,000 in the fourth quarter of 2008. The company continues to aggressively manage credit quality in this challenging economic environment.
Full year 2009 Review
Net loss for 2009 was $2,001,000 compared to net income of $3,396,000 for 2008. Net loss available to common shareholders was $ 0.45 per diluted share for 2009 compared to net income available to common shareholders of $0.45 per diluted share for 2008. Full year results were impacted by significant increases in the provision for loan losses. Specifically, an $11.1 million dollar provision was taken in the third quarter of 2009 in addition to the $3.7 million provision in the fourth quarter of 2009.
“Pre-provision core earnings* for the full year were equally impressive,” said Klimas. The pre-provision core earnings for 2009 were $14.3 million, up 39.1 percent from the $10.3 million in 2008.
Net interest income for 2009 was $37.7 million, a 17.4 percent increase over the $32.1 million for the same period the year earlier. The net interest margin for 2009 was 3.39 percent versus 3.23 percent for 2008. Noninterest income for 2009 was $12.0 million, compared to $12.5 million the year earlier.
Noninterest expense was $35.3 million for 2009, compared to $34.3 million in 2008. An increase of $1.9 million in FDIC premiums accounted for much of the year over year increase in expenses. “Expense management continues to be a major area of focus,” said Klimas.
Total assets at December 31, 2009 were $1.15 billion, up from $1.14 billion at year-end 2008.
* 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 $1.1 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 20 retail-banking locations and 27 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 fluctuations in interest rates, inflation, government regulations, and economic conditions and competition in the geographic and business areas in which LNB Bancorp, Inc. conducts its operations, as well as the risks and uncertainties described from time to time in LNB Bancorp’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 | |||||
December 31, 2009 | December 31, 2008 | ||||
(unaudited) | (audited) | ||||
(Dollars in thousands except share amounts) | |||||
ASSETS | |||||
Cash and due from Banks | $ 26,933 | $ 36,923 | |||
Interest-bearing deposits in other banks | 359 | 352 | |||
Securities: (Note 5) | |||||
Trading securities, at fair value | 8,445 | 11,261 | |||
Available for sale, at fair value | 247,037 | 223,104 | |||
Federal Home Loan Bank and Federal Reserve Stock | 4,985 | 4,839 | |||
Total securities | 260,467 | 239,204 | |||
Loans held for sale | 3,783 | 3,580 | |||
Loans: | |||||
Portfolio loans | 803,197 | 803,551 | |||
Allowance for loan losses | (18,792 | ) | (11,652 | ) | |
Net loans | 784,405 | 791,899 | |||
Bank premises and equipment, net | 10,105 | 11,504 | |||
Other real estate owned | 1,264 | 1,108 | |||
Bank owned life insurance | 16,435 | 15,742 | |||
Goodwill, net | 21,582 | 21,570 | |||
Intangible assets, net | 1,005 | 1,154 | |||
Accrued interest receivable | 4,072 | 4,290 | |||
Other assets | 19,099 | 8,809 | |||
Total Assets | $ 1,149,509 | $ 1,136,135 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Deposits | |||||
Demand and other noninterest-bearing | $ 118,505 | $ 93,994 | |||
Savings, money market and interest-bearing demand | 305,045 | 328,861 | |||
Certificates of deposit | 547,883 | 498,320 | |||
Total deposits | 971,433 | 921,175 | |||
Short-term borrowings | 1,457 | 22,928 | |||
Federal Home Loan Bank advances | 42,505 | 53,357 | |||
Junior subordinated debentures | 20,620 | 20,620 | |||
Accrued interest payable | 2,074 | 3,813 | |||
Accrued taxes, expenses and other liabilities | 7,279 | 7,183 | |||
Total Liabilities | 1,045,368 | 1,029,076 | |||
Shareholders' Equity | |||||
Common stock, par value $1 per share, authorized 15,000,000 shares, issued 7,295,663 shares at December 31, 2009 and December 31, 2008 | 7,624 | 7,624 | |||
Preferred Shares, Series A Voting, no par value, authorized 750,000 shares, none issued at December 31, 2009 and December 31, 2008. | - | - | |||
Preferred Stock, Series B, $1,000 par value, authorized 25,223 shares at December 31, 2009 and December 31, 2008. | 25,223 | 25,223 | |||
Discount on Series B preferred stock | (131 | ) | (146 | ) | |
Warrant to purchase common stock | 146 | 146 | |||
Additional paid-in capital | 37,862 | 37,783 | |||
Retained earnings | 36,883 | 41,682 | |||
Accumulated other comprehensive income | 2,626 | 839 | |||
Treasury shares at cost, 328,194 shares at December 31, 2009 and December 31, 2008 | (6,092 | ) | (6,092 | ) | |
Total Shareholders' Equity | 104,141 | 107,059 | |||
Total Liabilities and Shareholders' Equity | $ 1,149,509 | $ 1,136,135 |
Consolidated Statements of Income | ||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||
(unaudited) | (audited) | (unaudited) | (audited) | |||||||
2009 | 2008 | 2009 | 2008 | |||||||
(Dollars in thousands except share and per share amounts) | ||||||||||
Interest Income | ||||||||||
Loans | $ 11,378 | $ 11,800 | $ 45,885 | $ 48,314 | ||||||
Securities: | ||||||||||
U.S. Government agencies and corporations | 2,486 | 2,143 | 10,052 | 7,938 | ||||||
State and political subdivisions | 248 | 226 | 1,008 | 777 | ||||||
Trading securities | 66 | 110 | 400 | 848 | ||||||
Other debt and equity securities | 61 | 90 | 244 | 304 | ||||||
Federal funds sold and short-term investments | 6 | 17 | 58 | 147 | ||||||
Total interest income | 14,245 | 14,386 | 57,647 | 58,328 | ||||||
Interest Expense | ||||||||||
Deposits | 3,550 | 5,265 | 17,379 | 22,306 | ||||||
Federal Home Loan Bank advances | 350 | 553 | 1,481 | 2,322 | ||||||
Short-term borrowings | 13 | 33 | 124 | 387 | ||||||
Trust preferred securities | 220 | 284 | 941 | 1,174 | ||||||
Total interest expense | 4,133 | 6,135 | 19,925 | 26,189 | ||||||
Net Interest Income | 10,112 | 8,251 | 37,722 | 32,139 | ||||||
Provision for Loan Losses | 3,657 | 1,200 | 19,017 | 6,809 | ||||||
Net interest income after provision for loan losses | 6,455 | 7,051 | 18,705 | 25,330 | ||||||
Noninterest Income | ||||||||||
Investment and trust services | 514 | 348 | 1,919 | 1,908 | ||||||
Deposit service charges | 1,146 | 1,201 | 4,478 | 4,760 | ||||||
Other service charges and fees | 667 | 680 | 2,775 | 2,710 | ||||||
Income from bank owned life insurance | 153 | 244 | 693 | 979 | ||||||
Other income | 101 | 120 | 317 | 856 | ||||||
Total fees and other income | 2,581 | 2,593 | 10,182 | 11,213 | ||||||
Securities gains (losses), net | 16 | 32 | 690 | 538 | ||||||
Gains on sale of loans | 183 | 155 | 1,146 | 797 | ||||||
Gains (losses) on sale of other assets, net | (49 | ) | 33 | (62 | ) | (89 | ) | |||
Total noninterest income | 2,731 | 2,813 | 11,956 | 12,459 | ||||||
Noninterest Expense | ||||||||||
Salaries and employee benefits | 4,012 | 3,788 | 15,142 | 15,255 | ||||||
Furniture and equipment | 974 | 870 | 4,344 | 3,950 | ||||||
Net occupancy | 569 | 570 | 2,354 | 2,386 | ||||||
Outside services | 458 | 494 | 2,459 | 2,490 | ||||||
Marketing and public relations | 194 | 158 | 961 | 987 | ||||||
Supplies, postage and freight | 309 | 376 | 1,260 | 1,468 | ||||||
Telecommunications | 217 | 215 | 813 | 850 | ||||||
Ohio Franchise tax | 219 | 225 | 908 | 895 | ||||||
FDIC Insurance | 590 | 486 | 2,622 | 722 | ||||||
Other real estate owned | 104 | 178 | 367 | 1,070 | ||||||
Electronic banking expenses | 202 | 185 | 800 | 932 | ||||||
Loan and collection expense | 383 | 192 | 1,346 | 908 | ||||||
Other expense | 522 | 684 | 1,954 | 2,368 | ||||||
Total noninterest expense | 8,753 | 8,421 | 35,330 | 34,281 | ||||||
Income before income tax expense (benefit) | 433 | 1,443 | (4,669 | ) | 3,508 | |||||
Income tax expense (benefit) | (109 | ) | 182 | (2,668 | ) | 112 | ||||
Net Income (Loss) | 542 | 1,261 | (2,001 | ) | 3,396 | |||||
Less Preferred Stock Dividend and Accretion | 319 | 91 | 1,256 | 91 | ||||||
Income (Loss) Available to Common Shareholders | $ 223 | $ 1,170 | $ (3,257 | ) | $ 3,305 | |||||
Net Income (Loss) Per Common Share | ||||||||||
Basic | $ 0.03 | $ 0.16 | $ (0.45 | ) | $ 0.45 | |||||
Diluted | 0.03 | 0.16 | (0.45 | ) | 0.45 | |||||
Dividends declared | 0.01 | 0.09 | 0.20 | 0.54 | ||||||
Average Common Shares Outstanding | ||||||||||
Basic | 7,295,663 | 7,295,663 | 7,295,663 | 7,295,663 | ||||||
Diluted | 7,295,797 | 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 | Twelve Months Ended | |||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||
2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||
END OF PERIOD BALANCES | ||||||||||||||
Assets | $ 1,149,509 | $ 1,181,179 | $ 1,136,135 | $ 1,149,509 | $ 1,136,135 | |||||||||
Deposits | 971,433 | 968,991 | 921,175 | 971,433 | 921,175 | |||||||||
Portfolio loans | 803,197 | 813,600 | 803,551 | 803,197 | 803,551 | |||||||||
Allowance for loan losses | 18,792 | 22,556 | 11,652 | 18,792 | 11,652 | |||||||||
Shareholders' equity | 104,141 | 104,998 | 107,059 | 104,141 | 107,059 | |||||||||
AVERAGE BALANCES | ||||||||||||||
Assets: | ||||||||||||||
Total assets | $ 1,156,506 | $ 1,236,055 | $ 1,117,870 | $ 1,194,390 | $ 1,082,499 | |||||||||
Earning assets | 1,097,052 | 1,169,229 | 1,045,233 | 1,128,107 | 1,008,567 | |||||||||
Securities | 263,855 | 290,860 | 213,731 | 273,723 | 213,330 | |||||||||
Total loans | 814,522 | 818,877 | 800,101 | 812,692 | 779,569 | |||||||||
Liabilities and shareholders' equity: | ||||||||||||||
Total deposits | $ 974,780 | $ 1,018,968 | $ 920,053 | $ 985,811 | $ 879,301 | |||||||||
Interest bearing deposits | 861,795 | 924,479 | 830,051 | 890,081 | 791,999 | |||||||||
Interest bearing liabilities | 926,948 | 1,021,900 | 933,130 | 980,332 | 902,818 | |||||||||
Total shareholders' equity | 105,334 | 108,307 | 86,027 | 107,328 | 83,020 | |||||||||
INCOME STATEMENT | ||||||||||||||
Net interest income | $ 10,112 | $ 9,578 | $ 8,251 | $ 37,722 | $ 32,139 | |||||||||
Net interest income-FTE (1) | 10,240 | 9,714 | 8,376 | 38,247 | 32,579 | |||||||||
Provision for loan losses | 3,657 | 11,067 | 1,200 | 19,017 | 6,809 | |||||||||
Noninterest income | 2,731 | 3,124 | 2,813 | 11,956 | 12,459 | |||||||||
Noninterest expense | 8,753 | 8,737 | 8,421 | 35,330 | 34,281 | |||||||||
Taxes | (109 | ) | (2,726 | ) | 182 | (2,668 | ) | 112 | ||||||
Net income (loss) | 542 | (4,376 | ) | 1,261 | (2,001 | ) | 3,396 | |||||||
Less Preferred stock dividend and accretion | 319 | 319 | 91 | 1,256 | 91 | |||||||||
Net income (loss) available to common shareholders | 223 | (4,695 | ) | 1,170 | (3,257 | ) | 3,305 | |||||||
PER SHARE DATA | ||||||||||||||
Basic net income per common share | $ 0.03 | $ (0.64 | ) | $ 0.16 | $ (0.45 | ) | $ 0.45 | |||||||
Diluted net income per common share | 0.03 | (0.64 | ) | 0.16 | (0.45 | ) | 0.45 | |||||||
Cash dividends per common share | 0.01 | 0.01 | 0.09 | 0.20 | 0.54 | |||||||||
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 | 7,295,797 | 7,295,663 | 7,295,663 | 7,295,663 | 7,295,663 | |||||||||
KEY RATIOS | ||||||||||||||
Return on average assets (2) | 0.19 | % | -1.40 | % | 0.45 | % | -0.17 | % | 0.31 | % | ||||
Return on average common equity (2) | 2.04 | % | -16.03 | % | 5.83 | % | -1.86 | % | 4.09 | % | ||||
Efficiency ratio | 67.48 | % | 68.06 | % | 75.26 | % | 70.37 | % | 76.12 | % | ||||
Noninterest expense to average assets (2) | 3.00 | % | 2.80 | % | 3.00 | % | 2.96 | % | 3.17 | % | ||||
Average equity to average assets | 9.11 | % | 8.76 | % | 7.70 | % | 8.99 | % | 7.67 | % | ||||
Net interest margin | 3.66 | % | 3.25 | % | 3.14 | % | 3.34 | % | 3.19 | % | ||||
Net interest margin (FTE) (1) | 3.70 | % | 3.30 | % | 3.19 | % | 3.39 | % | 3.23 | % | ||||
ASSET QUALITY | ||||||||||||||
Nonperforming loans | $ 38,837 | $ 42,018 | $ 19,592 | $ 38,837 | $ 19,592 | |||||||||
Other real estate owned | 1,264 | 1,071 | 1,108 | 1,264 | 1,108 | |||||||||
Total nonperforming assets | 40,101 | 43,089 | 20,700 | 40,101 | 20,700 | |||||||||
Net Charge Offs | 7,421 | 1,489 | 903 | 11,877 | 2,977 | |||||||||
Total nonperforming loans to total loans | 4.84 | % | 5.16 | % | 2.44 | % | 4.84 | % | 2.44 | % | ||||
Total nonperforming assets to total assets | 3.49 | % | 3.65 | % | 1.82 | % | 3.49 | % | 1.82 | % | ||||
Net charge-offs to average loans (2) | 3.61 | % | 0.72 | % | 0.45 | % | 1.46 | % | 0.38 | % | ||||
Allowance for loan losses | 2.34 | % | 2.77 | % | 1.45 | % | 2.34 | % | 1.45 | % | ||||
Allowance to nonperforming loans | 48.39 | % | 53.68 | % | 59.47 | % | 48.39 | % | 59.47 | % | ||||
(1) FTE -- fully tax equivalent at 34% tax rate | ||||||||||||||
(2) Annualized |
Reconciliation of Pre-Provision Core Earnings* | |||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||
2009 | 2008 | 2009 | 2008 | ||||||
Pre-provision Core Earnings* | $ 4,090 | $ 2,643 | $ 14,348 | $ 10,317 | |||||
Provision for Loan Losses | 3,657 | 1,200 | 19,017 | 6,809 | |||||
Income (loss) before income tax expense (benefit) | $ 433 | $ 1,443 | $ (4,669 | ) | $ 3,508 |
* 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