Exhibit 99.1
LNB Bancorp, Inc. Reports Second Quarter 2010 Results
- Net income for second quarter is up 140.9 percent compared to the prior year
- Net interest income increases 6.0 percent 2Q10 vs. 2Q09
- Noninterest expense declines 5.5 percent in the second quarter compared to the prior year
LORAIN, Ohio--(BUSINESS WIRE)--August 3, 2010--LNB Bancorp, Inc. (NASDAQ: LNBB) today reported net income for the three months ended June 30, 2010 of $1,243,000, or $0.12 per diluted share, compared with $516,000, or $0.03 per diluted share reported for the same period a year ago.
For the first six months of 2010, net income was $2,574,000, or $0.26 per diluted share, compared with $1,833,000, or $0.17 per diluted share for the first half of 2009.
“We are pleased to report another quarter of profitability sustained by strong core earnings growth and revenue increases,” said Daniel E. Klimas, president and chief executive officer of LNB Bancorp, Inc. “Pre-provision core earnings* increased 25.43 percent in the second quarter of 2010 compared to the same quarter in 2009. While the economic environment continues to pose challenges, net interest income increased 5.95 percent and our net interest margin continued to strengthen when compared to the same period a year ago.”
Noninterest expense showed a 5.51 percent decline for the quarter ended June 30, 2010 compared to the same period one year ago which included a special assessment from the Federal Deposit Insurance Corporation (FDIC).
“While the past two quarters have produced heartening results, we continue to take significant reserves to provide for additional losses in our credit portfolio as the economic environment continues to be challenging,” said Klimas. “Our focus remains fixed on building revenues and aggressively managing our assets.”
Pre-provision core earnings* equaled $3,635,000 for the second quarter compared to $2,898,000 for the second quarter one year ago, an increase of 25.43 percent. For the first six months of 2010, pre-provision core earnings* totaled $7,372,000 compared to $6,293,000 for the first six months of 2009, an increase of 17.2 percent.
Key Performance Measures
Net interest income on a fully taxable equivalent basis for the second quarter of 2010 was $9,826,000, a 5.95 percent increase compared with $9,274,000 for the second quarter a year ago. For the first half of 2010, net interest income on a fully tax equivalent basis was $19,728,000, compared to $18,293,000 for the same period in 2009, an increase of 7.84 percent. The net interest margin for the second quarter of 2010 was 3.61 percent, compared with 3.28 percent for the second quarter of 2009. It represented a modest decline from 3.69 percent in the first quarter of 2010. Noninterest income for the second quarter of 2010 was $2,896,000, an improvement from the $2,651,000 in the first quarter of 2010, but down from the $3,244,000 in the second quarter of 2009. For the first six months of 2010, noninterest income was $5,547,000, compared to $6,101,000 for the first six months of 2009.
Noninterest expense was $8,958,000, a 5.51 percent decline from the $9,480,000 in the second quarter of 2009. Noninterest expense for the first half of 2010 was $17,651,000, compared to $17,840,000 for the same period a year earlier. Much of the decline was due to a special assessment from the FDIC imposed in 2009. The efficiency ratio, which is a measure of cost to generate revenue, was 70.41 percent in the second quarter of 2010, a significant improvement from 75.73 percent in the second quarter of 2009. The efficiency ratio for the first half of 2010 was 69.84 percent, compared to 73.13 percent in the first half of 2009.
The provision for loan losses totaled $2,109,000 for the quarter ended June 30, 2010, down from $2,484,000 for the second quarter a year ago. For the six-month period, the provision for loan losses was $4,218,000, compared with $4,293,000 for the first half of 2009.
Overall loan demand remains weak as total loans ended the quarter at $795,451,000 up slightly from $792,585,000 at the end of the first quarter of 2010, but down from $803,549,000 at the end of the second quarter of 2009. Total assets for the second quarter ended at $1,153,955,000 compared to $1,232,095,000 at the end of the second quarter of 2009. Total deposits were $973,890,000 at the end of the second quarter of 2010, compared to $1,014,724,000 at the end of the same quarter of 2009.
The Company continues to work through asset quality challenges amid a difficult economy. At June 30, 2010 the Company’s non-performing assets totaled $48,769,000, or 4.23 percent of total assets, compared to $44,374,000 or 3.83 percent of total assets at March 31, 2010 and $34,303,000 or 2.78 percent at June 30, 2009.
The allowance for possible loan losses is $19,435,000 at June 30, 2010 an increase from $19,183,000 at March 31, 2010 and $12,978,000 at June 30, 2009. The allowance to total loans at June 30, 2010 equaled 2.44 percent compared to 2.42 percent and 1.62 percent at March 31, 2010 and June 30, 2009, respectively.
Net charge-offs to average loans for the quarter ending June 30, 2010 was 0.94 percent, compared to 0.54 percent one year ago.
* 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. 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 June 30, 2010 | At December 31, 2009 | |||||||
(unaudited) | ||||||||
(Dollars in thousands except share amounts) | ||||||||
ASSETS | ||||||||
Cash and due from Banks | $ | 17,876 | $ | 16,318 | ||||
Federal funds sold and short-term investments | 37,100 | 10,615 | ||||||
Cash and cash equivalents | 54,976 | 26,933 | ||||||
Interest-bearing deposits in other banks | 346 | 359 | ||||||
Securities: | ||||||||
Trading securities, at fair value | - | 8,445 | ||||||
Available for sale, at fair value | 244,111 | 247,037 | ||||||
Federal Home Loan Bank and Federal Reserve Stock | 5,741 | 4,985 | ||||||
Total Securities | 249,852 | 260,467 | ||||||
Loans held for sale | 1,528 | 3,783 | ||||||
Loans: | ||||||||
Portfolio loans | 795,451 | 803,197 | ||||||
Allowance for loan losses | (19,435 | ) | (18,792 | ) | ||||
Net loans | 776,016 | 784,405 | ||||||
Bank premises and equipment, net | 9,654 | 10,105 | ||||||
Other real estate owned | 2,355 | 1,264 | ||||||
Bank owned life insurance | 16,780 | 16,435 | ||||||
Goodwill, net | 21,582 | 21,582 | ||||||
Intangible assets, net | 938 | 1,005 | ||||||
Accrued interest receivable | 3,994 | 4,072 | ||||||
Other assets | 15,934 | 19,099 | ||||||
Total Assets | $ | 1,153,955 | $ | 1,149,509 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Deposits | ||||||||
Demand and other noninterest-bearing | $ | 115,689 | $ | 118,505 | ||||
Savings, money market and interest-bearing demand | 307,560 | 305,045 | ||||||
Certificates of deposit | 550,641 | 547,883 | ||||||
Total deposits | 973,890 | 971,433 | ||||||
Short-term borrowings | 1,725 | 1,457 | ||||||
Federal Home Loan Bank advances | 42,503 | 42,505 | ||||||
Junior subordinated debentures | 20,620 | 20,620 | ||||||
Accrued interest payable | 1,935 | 2,074 | ||||||
Accrued taxes, expenses and other liabilities | 6,143 | 7,279 | ||||||
Total Liabilities | 1,046,816 | 1,045,368 | ||||||
Shareholders' Equity | ||||||||
Preferred Shares, Series A Voting, no par value, authorized 750,000 shares, none issued at June 30, 2010 and December 31, 2009. | - | - | ||||||
Preferred stock, Series B, no par value, 25,233 shares authorized and issued at June 30, 2010 and December 31, 2009. | 25,223 | 25,223 | ||||||
Discount on Series B preferred stock | (124 | ) | (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 June 30, 2010 and 7,623,857 at December 31, 2009. | 7,691 | 7,624 | ||||||
Additional paid-in capital | 37,837 | 37,862 | ||||||
Retained earnings | 38,672 | 36,883 | ||||||
Accumulated other comprehensive income | 3,786 | 2,626 | ||||||
Treasury shares at cost, 328,194 shares at June 30, 2010 and at December 31, 2009 | (6,092 | ) | (6,092 | ) | ||||
Total Shareholders' Equity | 107,139 | 104,141 | ||||||
Total Liabilities and Shareholders' Equity | $ | 1,153,955 | $ | 1,149,509 | ||||
Consolidated Statements of Income (unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||||
(Dollars in thousands except share and per share amounts) | (Dollars in thousands except share and per share amounts) | ||||||||||||||
Interest Income | |||||||||||||||
Loans | $ | 10,580 | $ | 11,360 | $ | 21,372 | $ | 22,971 | |||||||
Securities: | |||||||||||||||
U.S. Government agencies and corporations | 2,070 | 2,537 | 4,206 | 5,012 | |||||||||||
State and political subdivisions | 245 | 266 | 491 | 499 | |||||||||||
Trading securities | - | 119 | 49 | 246 | |||||||||||
Other debt and equity securities | 69 | 55 | 130 | 118 | |||||||||||
Federal funds sold and short-term investments | 11 | 19 | 20 | 33 | |||||||||||
Total interest income | 12,975 | 14,356 | 26,268 | 28,879 | |||||||||||
Interest Expense | |||||||||||||||
Deposits | 2,745 | 4,601 | 5,725 | 9,503 | |||||||||||
Federal Home Loan Bank advances | 316 | 348 | 634 | 780 | |||||||||||
Short-term borrowings | 1 | 32 | 2 | 68 | |||||||||||
Junior subordinated debenture | 216 | 241 | 431 | 496 | |||||||||||
Total interest expense | 3,278 | 5,222 | 6,792 | 10,847 | |||||||||||
Net Interest Income | 9,697 | 9,134 | 19,476 | 18,032 | |||||||||||
Provision for Loan Losses | 2,109 | 2,484 | 4,218 | 4,293 | |||||||||||
Net interest income after provision for loan losses | 7,588 | 6,650 | 15,258 | 13,739 | |||||||||||
Noninterest Income | |||||||||||||||
Investment and trust services | 563 | 559 | 1,008 | 909 | |||||||||||
Deposit service charges | 1,094 | 1,095 | 2,033 | 2,121 | |||||||||||
Other service charges and fees | 826 | 705 | 1,620 | 1,342 | |||||||||||
Income from bank owned life insurance | 173 | 165 | 344 | 327 | |||||||||||
Other income | 69 | 81 | 162 | 164 | |||||||||||
Total fees and other income | 2,725 | 2,605 | 5,167 | 4,863 | |||||||||||
Securities gains, net | - | 249 | 38 | 586 | |||||||||||
Gains on sale of loans | 195 | 368 | 387 | 622 | |||||||||||
Gains (loss) on sale of other assets, net | (24 | ) | 22 | (45 | ) | 30 | |||||||||
Total noninterest income | 2,896 | 3,244 | 5,547 | 6,101 | |||||||||||
Noninterest Expense | |||||||||||||||
Salaries and employee benefits | 3,911 | 3,802 | 7,829 | 7,520 | |||||||||||
Furniture and equipment | 917 | 1,189 | 1,850 | 2,331 | |||||||||||
Net occupancy | 581 | 570 | 1,196 | 1,214 | |||||||||||
Outside services | 595 | 789 | 1,148 | 1,344 | |||||||||||
Marketing and public relations | 326 | 295 | 572 | 539 | |||||||||||
Supplies, postage and freight | 302 | 306 | 644 | 640 | |||||||||||
Telecommunications | 211 | 185 | 423 | 388 | |||||||||||
Ohio Franchise tax | 281 | 225 | 562 | 457 | |||||||||||
FDIC assessments | 557 | 976 | 1,085 | 1,289 | |||||||||||
Other real estate owned | 71 | 103 | 152 | 174 | |||||||||||
Electronic banking expenses | 238 | 200 | 422 | 389 | |||||||||||
Loan and collection expense | 450 | 368 | 773 | 578 | |||||||||||
Other expense | 518 | 472 | 995 | 977 | |||||||||||
Total noninterest expense | 8,958 | 9,480 | 17,651 | 17,840 | |||||||||||
Income before income tax expense | 1,526 | 414 | 3,154 | 2,000 | |||||||||||
Income tax expense (benefit) | 283 | (102 | ) | 580 | 167 | ||||||||||
Net Income | $ | 1,243 | $ | 516 | $ | 2,574 | $ | 1,833 | |||||||
Dividends and accretion on preferred stock | 318 | 319 | 637 | 618 | |||||||||||
Net Income Available to Common Shareholders | $ | 925 | $ | 197 | $ | 1,937 | $ | 1,215 | |||||||
Net Income Per Common Share | |||||||||||||||
Basic | $ | 0.12 | $ | 0.03 | $ | 0.26 | $ | 0.17 | |||||||
Diluted | 0.12 | 0.03 | 0.26 | 0.17 | |||||||||||
Dividends declared | 0.01 | 0.09 | 0.02 | 0.18 | |||||||||||
Average Common Shares Outstanding | |||||||||||||||
Basic | 7,363,161 | 7,295,663 | 7,343,023 | 7,295,663 | |||||||||||
Diluted | 7,363,161 | 7,295,663 | 7,343,023 | 7,295,663 | |||||||||||
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, | June 30, | June 30, | June 30, | ||||||||||||||||
2010 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
END OF PERIOD BALANCES | ||||||||||||||||||||
Assets | $ | 1,153,955 | $ | 1,158,763 | $ | 1,232,095 | $ | 1,153,955 | $ | 1,232,095 | ||||||||||
Deposits | 973,890 | 979,053 | 1,014,724 | 973,890 | 1,014,724 | |||||||||||||||
Portfolio loans | 795,451 | 792,585 | 803,549 | 795,451 | 803,549 | |||||||||||||||
Allowance for loan losses | 19,435 | 19,183 | 12,978 | 19,435 | 12,978 | |||||||||||||||
Shareholders' equity | 107,139 | 105,381 | 107,679 | 107,139 | 107,679 | |||||||||||||||
AVERAGE BALANCES | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Total assets | $ | 1,158,724 | $ | 1,160,455 | $ | 1,202,197 | $ | 1,158,458 | $ | 1,186,135 | ||||||||||
Earning assets | 1,090,318 | 1,088,093 | 1,133,466 | 1,089,212 | 1,116,483 | |||||||||||||||
Securities | 258,413 | 256,310 | 278,340 | 257,367 | 264,732 | |||||||||||||||
Portfolio loans | 792,132 | 796,040 | 805,779 | 794,076 | 802,957 | |||||||||||||||
Liabilities and shareholders' equity: | ||||||||||||||||||||
Total deposits | $ | 980,917 | $ | 979,643 | $ | 995,775 | $ | 980,285 | $ | 972,927 | ||||||||||
Interest bearing deposits | 868,694 | 868,392 | 903,018 | 868,545 | 881,315 | |||||||||||||||
Interest bearing liabilities | 933,703 | 934,908 | 990,496 | 934,303 | 975,838 | |||||||||||||||
Total shareholders' equity | 106,314 | 105,026 | 108,255 | 105,802 | 107,981 | |||||||||||||||
INCOME STATEMENT | ||||||||||||||||||||
Net interest income | $ | 9,697 | $ | 9,779 | $ | 9,134 | $ | 19,476 | $ | 18,032 | ||||||||||
Net interest income-FTE (1) | 9,826 | 9,904 | 9,274 | 19,728 | 18,293 | |||||||||||||||
Provision for loan losses | 2,109 | 2,109 | 2,484 | 4,218 | 4,293 | |||||||||||||||
Noninterest income | 2,896 | 2,651 | 3,244 | 5,547 | 6,101 | |||||||||||||||
Noninterest expense | 8,958 | 8,693 | 9,480 | 17,651 | 17,840 | |||||||||||||||
Taxes | 283 | 297 | (102 | ) | 580 | 167 | ||||||||||||||
Net income | 1,243 | 1,331 | 516 | 2,574 | 1,833 | |||||||||||||||
Less Preferred stock dividend and amortization | 318 | 319 | 319 | 637 | 618 | |||||||||||||||
Net income available to common shareholders | $ | 925 | $ | 1,012 | $ | 197 | $ | 1,937 | $ | 1,215 | ||||||||||
PER SHARE DATA | ||||||||||||||||||||
Basic net income per common share | $ | 0.12 | $ | 0.14 | $ | 0.03 | $ | 0.26 | $ | 0.17 | ||||||||||
Diluted net income per common share | 0.12 | 0.14 | 0.03 | 0.26 | 0.17 | |||||||||||||||
Cash dividends per common share | 0.01 | 0.01 | 0.09 | 0.02 | 0.18 | |||||||||||||||
Basic average common shares outstanding | 7,363,161 | 7,322,662 | 7,295,663 | 7,343,023 | 7,295,663 | |||||||||||||||
Diluted average common shares outstanding | 7,363,161 | 7,322,662 | 7,295,663 | 7,343,023 | 7,295,663 | |||||||||||||||
KEY RATIOS | ||||||||||||||||||||
Return on average assets (2) | 0.43 | % | 0.47 | % | 0.17 | % | 0.45 | % | 0.31 | % | ||||||||||
Return on average common equity (2) | 4.69 | % | 5.14 | % | 1.91 | % | 4.91 | % | 3.42 | % | ||||||||||
Efficiency ratio | 70.41 | % | 69.24 | % | 75.73 | % | 69.84 | % | 73.13 | % | ||||||||||
Noninterest expense to average assets (2) | 3.10 | % | 3.04 | % | 3.16 | % | 3.07 | % | 3.03 | % | ||||||||||
Average equity to average assets | 9.18 | % | 9.05 | % | 9.00 | % | 9.13 | % | 9.10 | % | ||||||||||
Net interest margin | 3.57 | % | 3.64 | % | 3.23 | % | 3.61 | % | 3.26 | % | ||||||||||
Net interest margin (FTE) (1) | 3.61 | % | 3.69 | % | 3.28 | % | 3.65 | % | 3.30 | % | ||||||||||
ASSET QUALITY | ||||||||||||||||||||
Allowance for Loan Losses | ||||||||||||||||||||
Allowance for loan losses, beginning of period | $ | 19,183 | $ | 18,792 | $ | 11,575 | $ | 18,792 | $ | 11,652 | ||||||||||
Provision for loan losses | 2,109 | 2,109 | 2,484 | 4,218 | 4,293 | |||||||||||||||
Charge-offs | 2,188 | 1,851 | 1,369 | 4,039 | 3,341 | |||||||||||||||
Recoveries | 331 | 133 | 288 | 464 | 374 | |||||||||||||||
Net charge-offs | 1,857 | 1,718 | 1,081 | 3,575 | 2,967 | |||||||||||||||
Allowance for loan losses, end of period | $ | 19,435 | $ | 19,183 | $ | 12,978 | $ | 19,435 | $ | 12,978 | ||||||||||
Nonperforming Assets | ||||||||||||||||||||
Nonperforming loans | $ | 46,414 | $ | 42,907 | $ | 33,133 | $ | 46,414 | $ | 33,133 | ||||||||||
Other real estate owned | 2,355 | 1,467 | 1,170 | 2,355 | 1,170 | |||||||||||||||
Total nonperforming assets | $ | 48,769 | $ | 44,374 | $ | 34,303 | $ | 48,769 | $ | 34,303 | ||||||||||
Ratios | ||||||||||||||||||||
Total nonperforming loans to total loans | 5.83 | % | 5.41 | % | 4.12 | % | 5.83 | % | 4.12 | % | ||||||||||
Total nonperforming assets to total assets | 4.23 | % | 3.83 | % | 2.78 | % | 4.23 | % | 2.78 | % | ||||||||||
Net charge-offs to average loans (2) | 0.94 | % | 0.88 | % | 0.54 | % | 0.91 | % | 0.75 | % | ||||||||||
Provision for loan losses to average loans (2) | 1.07 | % | 1.07 | % | 1.24 | % | 1.07 | % | 1.08 | % | ||||||||||
Allowance for loan losses to portfolio loans | 2.44 | % | 2.42 | % | 1.62 | % | 2.44 | % | 1.62 | % | ||||||||||
Allowance to nonperforming loans | 41.87 | % | 44.71 | % | 39.17 | % | 41.87 | % | 39.17 | % | ||||||||||
(1) FTE -- fully tax equivalent at 34% tax rate |
(2) Annualized |
Reconciliation of Pre-Provision Core Earnings* | ||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||
Pre-provision Core Earnings* | $ | 3,635 | $ | 2,898 | $ | 7,372 | $ | 6,293 | ||||
Provision for Loan Losses | 2,109 | 2,484 | 4,218 | 4,293 | ||||||||
Income before income tax expense | $ | 1,526 | $ | 414 | $ | 3,154 | $ | 2,000 | ||||
* 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