Exhibit 99.1
LNB Bancorp, Inc. Reports First Quarter 2010 Results
- Net income 14-cents per diluted share for 1st quarter 2010
- Net interest income shows 9.8 percent increase 1Q10 vs. 1Q09
- Net interest margin shows significant improvement
LORAIN, Ohio--(BUSINESS WIRE)--April 27, 2010--LNB Bancorp, Inc. (NASDAQ: LNBB) today reported net income for the three months ended March 31, 2010 of $1,331,000, or $.14 per diluted share, compared with $1,317,000, or $.14 per diluted share reported for the same period a year ago.
“We are pleased that our pre-provision core earnings* increased by 10 percent in the first quarter of 2010, compared with the first quarter a year ago, as we saw improvement once again in net interest income and net interest margin,” said Daniel E. Klimas, president and chief executive officer of LNB Bancorp, Inc. “Such a strong core earnings performance provides a solid foundation for the future.
“We continue to take significant reserves to provide for additional losses in our credit portfolio amid this difficult economic environment,” said Klimas.
Key Performance Measures
Net interest income on a fully taxable equivalent basis for the first quarter of 2010 was $9,904,000, a 9.8 percent increase compared with $9,019,000 for the first quarter a year ago. The increase in net interest income was driven largely by the effect of lower market interest rates on the funding side while average earning assets decreased 1.02 percent on a year over year basis. As a result, the first quarter 2010 net interest margin improved 36 basis points to 3.69 percent, up from 3.33 percent one year ago.
The provision for loan losses totaled $2,109,000 for the quarter ended March 31, 2010 compared to $1,809,000 for the same period one year ago and $3,657,000 in the fourth quarter of 2009.
Noninterest income was $2,651,000 for the first quarter of 2010, compared to $2,857,000 for the first quarter of 2009. Trust fees, electronic banking fees and other fees increased year over year. Gains on the sale of loans were down $62,000, or 24.41 percent compared to the first quarter of last year. Gains on the sale of securities were down nearly $299,000 in the first quarter of 2010, compared to the first quarter of 2009.
Noninterest expense was $8,693,000 for the first quarter of 2010, compared with $8,360,000 for the first quarter of 2009, an increase of $333,000 or 3.98 percent. The increase attributable to the premium assessment from the Federal Deposit Insurance Corporation accounted for $215,000 of the increase. The efficiency ratio, which is the measure of cost to generate revenue, improved from 70.39 percent in 2009 to 69.24 percent in 2010.
During the first quarter, overall loan demand was weak as total loans ended the quarter at $792,585,000 compared to $803,197,000 at December 31, 2009 and $802,267,000 at March 31, 2009. Total assets for the first quarter ended at $1,158,763,000 compared to $1,188,335,000 at the end of the first quarter of 2009. Total deposits grew modestly to $979,053,000 at the end of the first quarter of 2010, up from $978,120,000 in the first quarter of 2009. The growth in deposits came in the form of core deposits, which had the effect of improving the Company’s liquidity while reducing its costs.
Given the current economic conditions the Company continues to work through asset quality challenges. At March 31, 2010 the Company’s non-performing assets totaled $44,374,000 or 3.83 percent of total assets compared to $40,101,000 or 3.49 percent at December 31, 2009 and $22,769,000 or 1.92 percent at March 31, 2009. As a result of the increase, the allowance for possible loan losses increased from $11,575,000 at March 31, 2009 to $18,792,000 at December 31, 2009 and $19,183,000 at March 31, 2010. The allowance to total loans at March 31, 2010 equaled 2.42 percent compared to 2.34 percent and 1.44 percent at December 31, 2009 and March 31, 2009, respectively.
Net charge-offs to average loans for the quarter ending March 31, 2010 was 0.87 percent compared to 0.95 percent one year ago. In addition to the effect of the overall economy and the level of unemployment, a significant factor impacting asset quality has been the lower market valuation of the underlying collateral, primarily in construction and development and commercial real estate loans and the need to provide additional allowances due to these lower valuations.
* 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 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. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. 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. Except to the extent required by law, 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 March 31, 2010 | | At December 31, 2009 |
| (unaudited) | | |
| (Dollars in thousands except share amounts) |
| ASSETS | | | |
| Cash and due from Banks | $ 18,717 | | | $ 16,318 | |
| Federal funds sold and short-term investments | 35,650 | | | 10,615 | |
| Cash and cash equivalents | 54,367 | | | 26,933 | |
| Interest-bearing deposits in other banks | 360 | | | 359 | |
| Securities: | | | |
| Trading securities, at fair value | - | | | 8,445 | |
| Available for sale, at fair value | 248,112 | | | 247,037 | |
| Federal Home Loan Bank and Federal Reserve Stock | 4,985 | | | 4,985 | |
| Total Securities | 253,097 | | | 260,467 | |
| Loans held for sale | 3,691 | | | 3,783 | |
| Loans: | | | |
| Portfolio loans | 792,585 | | | 803,197 | |
| Allowance for loan losses | (19,183 | ) | | (18,792 | ) |
| Net loans | 773,402 | | | 784,405 | |
| Bank premises and equipment, net | 9,782 | | | 10,105 | |
| Other real estate owned | 1,467 | | | 1,264 | |
| Bank owned life insurance | 16,607 | | | 16,435 | |
| Goodwill, net | 21,582 | | | 21,582 | |
| Intangible assets, net | 971 | | | 1,005 | |
| Accrued interest receivable | 3,882 | | | 4,072 | |
| Other assets | 19,555 | | | 19,099 | |
| Total Assets | $ 1,158,763 | | | $ 1,149,509 | |
| | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | |
| Deposits | | | |
| Demand and other noninterest-bearing | $ 111,896 | | | $ 118,505 | |
| Savings, money market and interest-bearing demand | 304,711 | | | 305,045 | |
| Certificates of deposit | 562,445 | | | 547,883 | |
| Total deposits | 979,052 | | | 971,433 | |
| Short-term borrowings | 1,589 | | | 1,457 | |
| Federal Home Loan Bank advances | 42,504 | | | 42,505 | |
| Junior subordinated debentures | 20,620 | | | 20,620 | |
| Accrued interest payable | 1,951 | | | 2,074 | |
| Accrued taxes, expenses and other liabilities | 7,666 | | | 7,279 | |
| Total Liabilities | 1,053,382 | | | 1,045,368 | |
| Shareholders' Equity | | | |
Preferred Shares, Series A Voting, no par value, authorized 750,000 shares, none issued at March 31, 2010 and December 31, 2009. | - | | | - | |
| Preferred stock, Series B, no par value, 25,233 shares authorized and issued at March 31, 2010 and December 31, 2009. | 25,223 | | | 25,223 | |
| Discount on Series B preferred stock | (127 | ) | | (131 | ) |
| Warrant to purchase common stock | 146 | | | 146 | |
Common stock, par value $1 per share, authorized 15,000,000 shares, issued shares 7,691,355 at March 31, 2010 and 7,623,857 at December 31, 2009. | 7,691 | | | 7,624 | |
| Additional paid-in capital | 37,808 | | | 37,862 | |
| Retained earnings | 37,821 | | | 36,883 | |
| Accumulated other comprehensive income | 2,911 | | | 2,626 | |
Treasury shares at cost, 328,194 shares at March 31, 2010 and at December 31, 2009 | (6,092 | ) | | (6,092 | ) |
| Total Shareholders' Equity | 105,381 | | | 104,141 | |
| Total Liabilities and Shareholders' Equity | $ 1,158,763 | | | $ 1,149,509 | |
| Consolidated Statements of Income (unaudited) |
| |
| Three Months Ended March 31, |
| 2010 | | 2009 |
| (Dollars in thousands except
share and per share amounts) |
| Interest Income | | | |
| Loans | $ 10,792 | | | $ 11,611 |
| Securities: | | | |
| U.S. Government agencies and corporations | 2,136 | | | 2,475 |
| State and political subdivisions | 246 | | | 233 |
| Trading securities | 49 | | | 127 |
| Other debt and equity securities | 61 | | | 63 |
| Federal funds sold and short-term investments | 9 | | | 14 |
| Total interest income | 13,293 | | | 14,523 |
| | | | |
| Interest Expense | | | |
| Deposits | 2,980 | | | 4,902 |
| Federal Home Loan Bank advances | 318 | | | 432 |
| Short-term borrowings | 1 | | | 36 |
| Junior subordinated debenture | 215 | | | 255 |
| Total interest expense | 3,514 | | | 5,625 |
| Net Interest Income | 9,779 | | | 8,898 |
| Provision for Loan Losses | 2,109 | | | 1,809 |
| Net interest income after provision for loan losses | 7,670 | | | 7,089 |
| | | | |
| Noninterest Income | | | |
| Investment and trust services | 445 | | | 350 |
| Deposit service charges | 939 | | | 1,026 |
| Other service charges and fees | 794 | | | 637 |
| Income from bank owned life insurance | 171 | | | 162 |
| Other income | 93 | | | 83 |
| Total fees and other income | 2,442 | | | 2,258 |
| Securities gains, net | 38 | | | 337 |
| Gains on sale of loans | 192 | | | 254 |
| Gains (loss) on sale of other assets, net | (21 | ) | | 8 |
| Total noninterest income | 2,651 | | | 2,857 |
| | | | |
| Noninterest Expense | | | |
| Salaries and employee benefits | 3,918 | | | 3,718 |
| Furniture and equipment | 933 | | | 1,142 |
| Net occupancy | 615 | | | 644 |
| Outside services | 553 | | | 555 |
| Marketing and public relations | 246 | | | 244 |
| Supplies, postage and freight | 342 | | | 334 |
| Telecommunications | 212 | | | 203 |
| Ohio Franchise tax | 281 | | | 232 |
| FDIC assessments | 528 | | | 313 |
| Other real estate owned | 81 | | | 71 |
| Electronic banking expenses | 184 | | | 189 |
| Loan and collection expense | 323 | | | 210 |
| Other expense | 477 | | | 505 |
| Total noninterest expense | 8,693 | | | 8,360 |
| Income before income tax expense | 1,628 | | | 1,586 |
| Income tax expense | 297 | | | 269 |
| Net Income | $ 1,331 | | | $ 1,317 |
| Dividends and accretion on preferred stock | 319 | | | 299 |
| Net Income Available to Common Shareholders | $ 1,012 | | | $ 1,018 |
| | | |
| Net Income Per Common Share | | | |
| Basic | $ 0.14 | | | $ 0.14 |
| Diluted | 0.14 | | | 0.14 |
| Dividends declared | 0.01 | | | 0.09 |
| Average Common Shares Outstanding | | | |
| Basic | 7,322,662 | | | 7,295,663 |
| Diluted | 7,322,662 | | | 7,295,663 |
| LNB Bancorp, Inc. |
| Supplemental Financial Information |
| (Unaudited - Dollars in thousands except Share and Per Share Data) |
| | | |
| Three Months Ended |
| March 31, | March 31, | December 31, |
| 2010 | 2009 | 2009 |
| END OF PERIOD BALANCES | | | |
| Assets | $ 1,158,763 | | $ 1,188,335 | | $ 1,149,509 | |
| Deposits | 979,053 | | 978,120 | | 971,433 | |
| Portfolio loans | 792,585 | | 802,267 | | 803,197 | |
| Allowance for loan losses | 19,183 | | 11,575 | | 18,792 | |
| Shareholders' equity | 105,381 | | 108,108 | | 104,141 | |
| | | |
| AVERAGE BALANCES | | | |
| Assets: | | | |
| Total assets | $ 1,160,455 | | $ 1,169,895 | | $ 1,156,506 | |
| Earning assets | 1,088,093 | | 1,099,313 | | 1,097,052 | |
| Securities | 288,997 | | 291,624 | | 263,855 | |
| Total loans | 799,096 | | 807,689 | | 814,522 | |
| Liabilities and shareholders' equity: | | | |
| Total deposits | $ 979,643 | | $ 949,825 | | $ 974,780 | |
| Interest bearing deposits | 868,392 | | 859,370 | | 861,795 | |
| Interest bearing liabilities | 934,908 | | 961,018 | | 926,948 | |
| Total shareholders' equity | 105,026 | | 107,705 | | 105,334 | |
| | | |
| INCOME STATEMENT | | | |
| Net interest income | $ 9,779 | | $ 8,898 | | $ 10,112 | |
| Net interest income-FTE (1) | 9,904 | | 9,019 | | 10,240 | |
| Provision for loan losses | 2,109 | | 1,809 | | 3,657 | |
| Noninterest income | 2,651 | | 2,857 | | 2,731 | |
| Noninterest expense | 8,693 | | 8,360 | | 8,753 | |
| Taxes | 297 | | 269 | | (109 | ) |
| Net income | 1,331 | | 1,317 | | 542 | |
| Less Preferred stock dividend and amortization | 319 | | 299 | | 319 | |
| Net income available to common shareholders | 1,012 | | 1,018 | | 223 | |
| | | |
| PER SHARE DATA | | | |
| Basic net income per common share | $ 0.14 | | $ 0.14 | | $ 0.03 | |
| Diluted net income per common share | 0.14 | | 0.14 | | 0.03 | |
| Cash dividends per common share | 0.01 | | 0.09 | | 0.01 | |
| Basic average common shares outstanding | 7,322,662 | | 7,295,663 | | 7,295,663 | |
| Diluted average common shares outstanding | 7,322,662 | | 7,295,663 | | 7,295,797 | |
| | | |
| KEY RATIOS | | | |
| Return on average assets (2) | 0.47 | % | 0.46 | % | 0.19 | % |
| Return on average common equity (2) | 5.14 | % | 4.96 | % | 2.04 | % |
| Efficiency ratio | 69.24 | % | 70.39 | % | 67.48 | % |
| Noninterest expense to average assets (2) | 3.04 | % | 2.90 | % | 3.00 | % |
| Average equity to average assets | 9.05 | % | 9.21 | % | 9.11 | % |
| Net interest margin | 3.64 | % | 3.28 | % | 3.66 | % |
| Net interest margin (FTE) (1) | 3.69 | % | 3.33 | % | 3.70 | % |
| | | |
| ASSET QUALITY | | | |
| Nonperforming loans | $ 42,907 | | $ 21,301 | | $ 38,837 | |
| Other real estate owned | 1,467 | | 1,468 | | 1,264 | |
| Total nonperforming assets | 44,374 | | 22,769 | | 40,101 | |
| Net Charge Offs | 1,718 | | 1,886 | | 7,421 | |
| Total nonperforming loans to total loans | 5.41 | % | 2.66 | % | 4.84 | % |
| Total nonperforming assets to total assets | 3.83 | % | 1.92 | % | 3.49 | % |
| Net charge-offs to average loans (2) | 0.87 | % | 0.95 | % | 3.61 | % |
| Allowance for loan losses | 2.42 | % | 1.44 | % | 2.34 | % |
| Allowance to nonperforming loans | 44.71 | % | 54.34 | % | 48.39 | % |
| | | |
| (1) FTE -- fully tax equivalent at 34% tax rate |
| (2) Annualized | | | |
| Reconciliation of Pre-Provision Core Earnings* |
| | | |
| Three Months Ended March 31, |
| | | |
| 2010 | | 2009 |
| | | |
| Pre-provision Core Earnings* | $ 3,737 | | $ 3,395 |
| Provision for Loan Losses | 2,109 | | 1,809 |
| Income before income tax expense | $ 1,628 | | $ 1,586 |
| | | |
| | | |
| * 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
