LNB Bancorp (LNBB) 8-K LNB Bancorp, Inc. Reports Third Quarter 2014 Results

Exhibit 99.1

LNB Bancorp, Inc. Reports Third Quarter 2014 Results

• Net Income Available to Common Shareholders of $2.1 million, a 48% year-over-year increase
• Loans increased by $15.1 million or 6.7% annualized during the quarter
• Improved asset quality and lower net charge-offs resulted in a reduced provision for loan losses
• 36% increase in noninterest income from higher gains on sale of loans and improved trust income

LORAIN, Ohio--(BUSINESS WIRE)--October 29, 2014--LNB Bancorp, Inc. (NASDAQ: LNBB) (“LNB” or the “Company”) today reported financial results for the third quarter 2014. Net income available to common shareholders for the quarter ending September 30, 2014 was $2.1 million, or $0.22 per common share, compared to $1.4 million, or $0.15 per common share, for the third quarter 2013, an increase of 48%, or 47% on a per common share basis. For the nine months ended September 30, 2014, net income available to common shareholders was $5.7 million, or $0.59 per common share, compared to $4.0 million, or $0.44 per common share for the year ago period. This represents an increase in net income available to common shareholders of $1.7 million, or 43%, and $0.15, or 34%, per common share.

Loan balances at September 30, 2014 increased by $31 million compared to the third quarter of 2013, led by the consumer and commercial loan portfolios. Loan balances grew by $15.1 million for the three month period ended September 30, 2014 compared to the second quarter of 2014 (linked quarter), resulting in an annualized growth rate of 6.7%.

The Company continued to make progress on improving credit quality as non-performing assets for the third quarter declined $7 million as compared to the same quarter in 2013. The ratio of non-performing assets to total assets at September 30, 2014, was 1.53%, down from 2.14% at September 30, 2013.

“Overall, we are very pleased with the third quarter results. We’ve seen solid loan growth and improvement in credit quality continued, reducing charge-offs and the provision for loan losses,” stated Daniel E. Klimas, president and chief executive officer.

Noninterest income was $3.4 million for the third quarter of 2014 compared to $2.5 million for the prior-year third quarter. This year-over-year increase was driven primarily by gains on the sale of SBA (Small Business Administration) and consumer loans and an increase in Trust Department revenues, which more than offset the decline in gains on the sale of mortgage loans and lower deposit and service charge fees.

Gain on the sale of loans was $1.1 million for the quarter, compared to $374,000 for the third quarter of 2013. This increase is primarily due to the gain on the sale of SBA loans as this initiative continued to contribute nicely to the Company’s operating performance.

The provision for loan losses was $720,000 in the third quarter of 2014, down $230,000, or 24%, from the 2013 third quarter, reflecting the Company’s improvement in credit quality and covering slightly more than net charge-offs for the quarter. Net charge-offs were $718,000 for the third quarter of 2014, or 0.31% of average loans (annualized), compared to $974,000, or 0.44% of average loans (annualized), in the third quarter of 2013. The allowance for loan losses was $17.4 million, or 1.89% of total loans, at September 30, 2014 compared with $17.8 million, or 2.00% of total loans, at September 30, 2013. The allowance for loan losses coverage of nonperforming loans at the end of the third quarter improved to 96% from 71% at the end of the same quarter a year ago. “The credit quality indicators continued to improve, resulting in a lower provision this past quarter,” stated Klimas.

Noninterest expense was $8.8 million for the third quarter of 2014 compared with $8.3 million for the third quarter of 2013, an increase of 6.0%. Salaries and benefits costs were higher due to additions of staff in revenue producing areas. Noninterest expense for the first nine months of 2014 totaled $26.5 million, a $271,000 decrease from the same period a year ago.

The Company continued to maintain capital levels in excess of the regulatory requirements to be categorized as “well capitalized” with a total risk-based capital ratio of 12.34%, Tier 1 leverage ratio of 9.01% and tangible common equity to tangible assets ratio of 7.47% at September 30, 2014.

Total assets at September 30, 2014 were $1.24 billion, up $31 million, or 2.5%, from September 30, 2013. Total deposits at September 30, 2014 were $1.06 billion, up $25 million, or 2.4%, from September 30, 2013.

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, any capital-raising or acquisition activities of the Company; 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 September 30, 2014			At December 31, 2013
	(unaudited)
	(Dollars in thousands except share amounts)
ASSETS
Cash and due from Banks	$	29,804		$	36,717
Federal funds sold and interest bearing deposits in banks		6,363			15,555
Cash and cash equivalents		36,167			52,272
Securities Available for sale, at fair value		218,847			216,122
Total securities		218,847			216,122
Restricted stock		5,741			5,741
Loans held for sale		1,497			4,483
Loans:
Portfolio loans		922,514			902,299
Allowance for loan losses		(17,432	)		(17,505	)
Net loans		905,082			884,794
Bank premises and equipment, net		8,831			8,198
Other real estate owned		745			579
Bank owned life insurance		19,876			19,362
Goodwill, net		21,582			21,582
Intangible assets, net		356			457
Accrued interest receivable		3,714			3,621
Other assets		18,661			13,046
Total Assets	$	1,241,099		$	1,230,257
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Demand and other noninterest-bearing	$	153,952		$	148,961
Savings, money market and interest-bearing demand		451,150			393,778
Certificates of deposit		451,682			502,850
Total deposits		1,056,784			1,045,589
Short-term borrowings		2,674			4,576
Federal Home Loan Bank advances		46,867			46,708
Junior subordinated debentures		16,238			16,238
Accrued interest payable		674			789
Accrued taxes, expenses and other liabilities		4,797			4,901
Total Liabilities		1,128,034			1,118,801
Shareholders' Equity
Preferred stock, Series A Voting, no par value, authorized 150,000 shares at September 30, 2014 and December 31, 2013.		-			-
Fixed rate cumulative preferred stock, Series B, no par value, $1,000 liquidation value, no shares were issued at September 30, 2014 and 7,689 shares authorized and issued at December 31, 2013		-			7,689
Discount on Series B preferred stock		-			(19	)
Common stock, par value $1 per share, authorized 15,000,000 shares, issued shares 10,002,139 at September 30, 2014 and 10,001,717 at December 31, 2013		10,002			10,002
Additional paid-in capital		51,336			51,098
Retained earnings		59,356			53,966
Accumulated other comprehensive income (loss)		(1,452	)		(5,188	)
Treasury shares at cost, 336,745 shares at September 30, 2014 and 328,194 at December 31, 2013		(6,177	)		(6,092	)
Total Shareholders' Equity		113,065			111,456
Total Liabilities and Shareholders' Equity	$	1,241,099		$	1,230,257

Consolidated Statements of Income (unaudited)
	Three Months Ended September 30,		Three Months Ended September 30,			Nine Months Ended September 30,			Nine Months Ended September 30,
	2014		2013			2014			2013
	(Dollars in thousands except share and per share amounts)
Interest Income
Loans	$	8,960	$	8,973		$	27,076		$	27,291
Securities:
U.S. Government agencies and corporations		1,007		908			3,075			2,616
State and political subdivisions		311		301			924			887
Other debt and equity securities		66		115			250			337
Federal funds sold and short-term investments		6		7			30			23
Total interest income		10,350		10,304			31,355			31,154
Interest Expense
Deposits		1,026		1,200			3,131			3,685
Federal Home Loan Bank advances		158		158			470			469
Short-term borrowings		20		-			73			1
Junior subordinated debenture		170		171			508			511
Total interest expense		1,374		1,529			4,182			4,666
Net Interest Income		8,976		8,775			27,173			26,488
Provision for Loan Losses		720		950			2,513			3,350
Net interest income after provision for loan losses		8,256		7,825			24,660			23,138
Noninterest Income
Investment and trust services		425		363			1,281			1,178
Deposit service charges		850		923			2,469			2,608
Other service charges and fees		771		820			2,262			2,459
Income from bank owned life insurance		172		174			514			512
Other income		71		(218	)		328			335
Total fees and other income		2,289		2,062			6,854			7,092
Securities gains (losses), net		-		-			(5	)		178
Gains on sale of loans		1,056		374			2,649			1,617
Gains (loss) on sale of other assets, net		16		30			26			(17	)
Total noninterest income		3,361		2,466			9,524			8,870
Noninterest Expense
Salaries and employee benefits		4,649		4,200			13,754			13,451
Furniture and equipment		1,200		1,076			3,525			3,159
Net occupancy		568		564			1,784			1,701
Professional fees		421		337			1,341			1,413
Marketing and public relations		333		300			1,123			938
Supplies, postage and freight		243		228			675			809
Telecommunications		164		164			477			501
Ohio Franchise tax		224		304			671			914
Intangible asset amortization		34		-			101			102
FDIC assessments		255		293			788			773
Other real estate owned		5		155			66			280
Loan and collection expense		331		268			1,001			1,030
Other expense		391		412			1,169			1,133
Total noninterest expense		8,818		8,301			26,475			26,204
Income before income tax expense		2,799		1,990			7,709			5,804
Income tax expense		713		471			1,994			1,349
Net Income	$	2,086	$	1,519		$	5,715		$	4,455
Dividends and accretion on preferred stock		-		109			35			483
Net Income Available to Common Shareholders	$	2,086	$	1,410		$	5,680		$	3,972
Net Income Per Common Share
Basic	$	0.22	$	0.15		$	0.59		$	0.44
Diluted		0.22		0.15			0.59			0.44
Dividends declared		0.01		0.01			0.03			0.03
Average Common Shares Outstanding
Basic		9,626,536		9,213,170			9,622,737			8,840,945
Diluted		9,659,593		9,225,462			9,637,356			8,850,129

LNB Bancorp, Inc.
Supplemental Financial Information
(Unaudited - Dollars in thousands except Share and Per Share Data)
	Three Months Ended															Nine Months Ended
END OF PERIOD BALANCES	September 30, 2014			June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			September 30, 2014			September 30, 2013
Cash and Cash Equivalents	$	36,167		$	47,795		$	68,241		$	52,272		$	47,090		$	36,167		$	47,090
Securities		218,847			219,422			217,510			216,122			215,290			218,847			215,290
Restricted stock		5,741			5,741			5,741			5,741			5,741			5,741			5,741
Loans held for sale		1,497			2,856			1,811			4,483			2,110			1,497			2,110
Portfolio loans		922,514			907,365			910,189			902,299			891,300			922,514			891,300
Allowance for loan losses		17,432			17,430			17,497			17,505			17,791			17,432			17,791
Net loans		905,082			889,935			892,692			884,794			873,509			905,082			873,509
Other assets		73,765			71,093			69,398			66,845			66,762			73,765			66,762
Total assets	$	1,241,099		$	1,236,842		$	1,255,393		$	1,230,257		$	1,210,502		$	1,241,099		$	1,210,502
Total deposits		1,056,784			1,048,938			1,076,851			1,045,589			1,032,245			1,056,784			1,032,245
Other borrowings		65,779			66,413			66,723			67,522			64,539			65,779			64,539
Other liabilities		5,471			11,003			4,705			5,690			5,757			5,471			5,757
Total liabilities		1,128,034			1,126,354			1,148,279			1,118,801			1,102,541			1,128,034			1,102,541
Total shareholders' equity		113,065			110,488			107,114			111,456			107,961			113,065			107,961
Total liabilities and shareholders' equity	$	1,241,099		$	1,236,842		$	1,255,393		$	1,230,257		$	1,210,502		$	1,241,099		$	1,210,502
AVERAGE BALANCES
Assets:
Total assets	$	1,228,769		$	1,236,203		$	1,234,380		$	1,221,830		$	1,213,502		$	1,233,096		$	1,214,339
Earning assets*		1,151,577			1,154,063			1,150,500			1,137,943			1,130,695			1,152,051			1,130,682
Securities		217,791			223,198			217,753			214,860			222,229			219,581			218,900
Portfolio loans		915,773			907,851			906,843			899,899			883,321			910,188			883,565
Liabilities and shareholders' equity:																				-
Total deposits	$	1,044,021		$	1,056,144		$	1,055,980		$	1,041,763		$	1,036,149		$	1,052,004		$	1,035,760
Interest bearing deposits		883,713			905,838			910,340			891,589			896,937			899,866			896,997
Interest bearing liabilities		951,142			972,784			978,073			956,866			961,636			967,234			961,554
Total shareholders' equity		111,394			108,624			106,681			109,814			108,025			108,917			109,678
INCOME STATEMENT
Total Interest Income	$	10,350		$	10,612		$	10,393		$	10,525		$	10,304		$	31,355		$	31,154
Total Interest Expense		1,374			1,376			1,432			1,490			1,529			4,182			4,666
Net interest income		8,976			9,236			8,961			9,035			8,775			27,173			26,488
Provision for loan losses		720			893			900			1,025			950			2,513			3,350
Other income		2,289			2,322			2,243			2,524			2,062			6,854			7,092
Net gain on sale of assets		1,072			929			669			732			404			2,670			1,778
Noninterest expense		8,818			8,798			8,859			8,983			8,301			26,475			26,204
Income before income taxes		2,799			2,796			2,114			2,283			1,990			7,709			5,804
Income tax expense		713			773			508			577			471			1,994			1,349
Net income		2,086			2,023			1,606			1,706			1,519			5,715			4,455
Preferred stock dividend and accretion		-			-			35			163			109			35			483
Net income available to common shareholders	$	2,086		$	2,023		$	1,571		$	1,543		$	1,410		$	5,680		$	3,972
Common cash dividend declared and paid	$	97		$	97		$	97		$	93		$	93		$	290		$	265
Net interest income-FTE (1)	$	9,135		$	9,396		$	9,117		$	9,192		$	8,934		$	27,646		$	26,962
Total Operating Revenue (4)	$	12,496		$	12,647		$	12,029		$	12,448		$	11,400		$	37,170		$	35,832
	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
	2014			2014			2014			2013			2013			2014			2013
PER SHARE DATA
Basic net income per common share	$	0.22		$	0.21		$	0.16		$	0.16		$	0.15		$	0.59		$	0.44
Diluted net income per common share		0.22			0.21			0.16			0.16			0.15			0.59			0.44
Cash dividends per common share		0.01			0.01			0.01			0.01			0.01			0.03			0.03
Book value per common shares outstanding		11.70			11.43			11.08			10.73			10.62			11.70			10.62
Tangible book value per common shares outstanding**		9.43			9.16			8.81			8.45			8.25			9.43			8.25
Period-end common share market value		14.29			12.18			11.42			10.03			9.40			14.29			9.40
Market as a % of tangible book		151.57	%		132.97	%		129.69	%		118.69	%		113.93	%		151.57	%		113.93	%
Basic average common shares outstanding		9,626,536			9,664,972			9,668,297			9,379,355			9,213,170			9,622,737			8,840,945
Diluted average common shares outstanding		9,659,593			9,682,444			9,705,432			9,404,651			9,225,462			9,637,356			8,850,129
Common shares outstanding		9,665,394			9,664,972			9,664,972			9,673,523			9,303,702			9,665,394			9,303,702
KEY RATIOS
Return on average assets (ROA) (2)		0.67	%		0.66	%		0.53	%		0.55	%		0.50	%		0.62	%		0.49	%
Return on average common equity (ROE) (2)		7.43	%		7.47	%		6.11	%		6.16	%		5.58	%		7.02	%		5.43	%
Efficiency ratio		70.57	%		69.57	%		73.65	%		72.16	%		72.82	%		71.23	%		73.13	%
Noninterest expense to average assets (2)		2.85	%		2.85	%		2.91	%		2.92	%		2.71	%		2.87	%		2.89	%
Net interest margin (FTE) (1)		3.15	%		3.27	%		3.21	%		3.20	%		3.13	%		3.21	%		3.19	%
Common stock dividend payout ratio		4.63	%		4.79	%		6.18	%		6.10	%		6.54	%		5.08	%		6.83	%
Common stock market capitalization	$	138,118		$	117,719		$	110,374		$	97,025		$	87,455		$	138,118		$	87,455
ASSET QUALITY
Allowance for Loan Losses
Allowance for loan losses, beginning of period	$	17,430		$	17,497		$	17,505		$	17,791		$	17,815			17,505			17,637
Provision for loan losses		720			893			900			1,025			950			2,513			3,350
Charge-offs		856			1,033			998			1,570			1,354			2,888			4,449
Recoveries		138			73			90			259			380			302			1,253
Net charge-offs		718			960			908			1,311			974			2,586			3,196
Allowance for loan losses, end of period	$	17,432		$	17,430		$	17,497		$	17,505		$	17,791		$	17,432		$	17,791
Nonperforming Assets
Nonperforming loans	$	18,193		$	19,907		$	20,918		$	21,986		$	24,976		$	18,193		$	24,976
Other real estate owned		745			1,016			979			579			951			745			951
Total nonperforming assets	$	18,938		$	20,923		$	21,897		$	22,565		$	25,927		$	18,938		$	25,927
Ratios
Total nonperforming loans to total loans		1.97	%		2.19	%		2.30	%		2.44	%		2.80	%		1.97	%		2.80	%
Total nonperforming assets to total assets		1.53	%		1.69	%		1.74	%		1.83	%		2.14	%		1.53	%		2.14	%
Net charge-offs to average loans (2)		0.31	%		0.42	%		0.41	%		0.58	%		0.44	%		0.38	%		0.48	%
Provision for loan losses to average loans (2)		0.31	%		0.39	%		0.40	%		0.45	%		0.43	%		0.37	%		0.51	%
Allowance for loan losses to portfolio loans		1.89	%		1.92	%		1.92	%		1.94	%		2.00	%		1.89	%		2.00	%
Allowance to nonperforming loans		95.82	%		87.56	%		83.65	%		79.62	%		71.23	%		95.82	%		71.23	%
Allowance to nonperforming assets		92.05	%		83.31	%		79.91	%		77.58	%		68.62	%		92.05	%		68.62	%
CAPITAL & LIQUIDITY
Period-end tangible common equity to assets**		7.47	%		7.29	%		6.90	%		6.77	%		6.46	%		7.47	%		6.46	%
Average equity to assets		9.07	%		8.79	%		8.64	%		8.99	%		8.90	%		8.83	%		9.03	%
Average equity to loans		12.16	%		11.96	%		11.76	%		12.20	%		12.23	%		11.97	%		12.41	%
Average loans to deposits		87.72	%		85.96	%		85.88	%		86.38	%		85.25	%		86.52	%		85.31	%
Tier 1 leverage ratio (3)		9.01	%		8.77	%		8.61	%		9.22	%		8.95	%		9.01	%		8.95	%
Tier 1 risk-based capital ratio (3)		11.09	%		11.17	%		10.90	%		11.63	%		12.40	%		11.09	%		12.40	%
Total risk-based capital ratio (3)		12.34	%		12.43	%		12.15	%		12.89	%		12.65	%		12.34	%		12.65	%

(1)	FTE -- fully tax equivalent at 34% tax rate
(2)	Annualized
(3)	9-30-14 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.

**Non-GAAP Financial Measures - Statements included in this press release include non-GAAP financial measures. The Corporations use of these non-GAAP financial measures, includes the period-end tangible common equity to assets ratio, in their analysis of the company's performance. Period-end tangible common equity excludes preferred stock as well as goodwill and other intangible assets, net, from total stockholders' equity. Management believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Corporation. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider Corporation’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.

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