Exhibit 99.1
101 Main St.
P.O. Box 1628
Lafayette, IN 47902
(765) 742-1064
www.LSBANK.com
| FOR IMMEDIATE RELEASE | For further information contact: |
| February 7, 2008 | Randolph F. Williams |
| | President/CEO |
| | (765) 742-1064 |
| | Fax: (765) 429-5932 |
LSB Financial Corp. Announces Year-End and Fourth Quarter Results
Lafayette, IN: LSB Financial Corp. (NASDAQ:LSBI), the parent company of Lafayette Savings Bank, FSB, today reported that in the fourth quarter of 2007, it made a $1.3 million adjustment to earnings to reflect the decrease in property values of its classified assets, including a $688,000 loss in the value of its loans and contributions to Lafayette Neighborhood Housing Services. As a result of these adjustments, unaudited net income for 2007 was $1.6 million compared to net income of $3.4 million for 2006. The fourth quarter of 2007 showed an unaudited loss of $373,000. The allocation for loan loss reserves for 2007 was $1.6 million, an increase of $552,000 from the allocation made in 2006. Loan loss reserves now stand at 1.23% of total loans compared to 0.86% in 2006.
LSB President and CEO Randolph F. Williams stated, “As community bankers we are accustomed to working with our customers during economic downturns. We were expecting property values and real estate sales to rebound more quickly than they have, especially in light of the economic development in the area. That’s why this $1.3 million adjustment is such a disappointment. However, we believe this adjustment properly reflects the loss in value of our criticized assets and positions us well heading into 2008. In fact, year-end delinquency rates were at a 16 month low and Lafayette bankruptcy filings were half of what they were in 2004 and 2005.”
Williams continued, “We were saddened when LNHS announced in October that they had filed bankruptcy after 22 years of helping revitalize Lafayette’s neighborhoods. Several local banks directed a portion of their Community Reinvestment dollars to this program which was a model for national housing service agencies. As the court appointed receiver began selling some properties, it became clear that the struggling local economy would have an effect on these property values as well.”
Additionally, Williams stated, “The bank’s management team continues to work to offset the challenging economic conditions by reviewing processes, adding collection and workout personnel, meeting with struggling borrowers and controlling non-interest expenses. Unlike other banks that have experienced a difficult year, we do not have a “sub-prime” lending program and have not invested in securities backed by “sub-prime” loans. We have prudently managed our capital and remain “well-capitalized” under all regulatory capital requirements.”
The Company also announced that it will pay a quarterly cash dividend of $0.25 per share to shareholders of record as of the close of business on February 15, 2008 with a payment date of March 7, 2008. Mr. Williams said, “Based on our current stock price this dividend rate represents a 5.1% dividend yield. Until the local economic conditions improve and we are in a position to grow our balance sheet, we believe that returning this equity to our shareholders is a prudent way to manage our capital. To further enhance shareholder value, during the year we were able to repurchase over 3% of our outstanding shares.”
The financial information included in this press release is unaudited and subject to possible change when the audit is finalized.
The closing price of LSB stock on February 6, 2008 was $19.53 per share as reported by the Nasdaq National Market.
LSB FINANCIAL CORP. SELECTED CONSOLIDATED FINANCIAL INFORMATION (Dollars in thousands except share and per share amounts) | |
| Selected balance sheet data: | | Year ended December 31, 2007 | | | Year ended December 31, 2006 | |
| | | | | | | |
| Cash and due from banks | | $ | 1,644 | | | $ | 1,391 | |
| Short-term investments | | | 4,846 | | | | 8,336 | |
| Securities available-for-sale | | | 13,221 | | | | 16,316 | |
| Loans held for sale | | | --- | | | | 992 | |
| Net portfolio loans | | | 296,908 | | | | 316,699 | |
| Allowance for loan losses | | | 3,702 | | | | 2,770 | |
| Premises and equipment, net | | | 6,815 | | | | 6,600 | |
| Federal Home Loan Bank stock, at cost | | | 3,997 | | | | 3,997 | |
| Bank owned life insurance | | | 5,613 | | | | 5,381 | |
| Other assets | | | 8,966 | | | | 8,688 | |
| Total assets | | | 342,010 | | | | 368,400 | |
| | | | | | | | | |
| Deposits | | | 232,030 | | | | 255,304 | |
| Advances from Federal Home Loan Bank | | | 74,256 | | | | 76,618 | |
| Other liabilities | | | 1,792 | | | | 1,638 | |
| | | | | | | | | |
| Shareholders’ equity | | | 33,932 | | | | 34,840 | |
| Book value per share | | $ | 21.78 | | | $ | 21.73 | |
| Equity / assets | | | 9.92 | % | | | 9.46 | % |
| Total shares outstanding | | | 1,557,968 | | | | 1,603,209 | |
| | | | | | | | | |
| Asset quality data: | | | | | | | | |
| Non-accruing loans | | $ | 9,935 | | | $ | 7,364 | |
| Loans past due 90 days still on accrual | | | 59 | | | | 147 | |
| Other real estate / assets owned | | | 3,944 | | | | 4,169 | |
| Total non-performing assets | | | 13,938 | | | | 11,680 | |
| Non-performing loans / total loans | | | 3.32 | % | | | 2.34 | % |
| Non-performing assets / total assets | | | 4.08 | % | | | 3.17 | % |
| Allowance for loan losses / non-performing loans | | | 37.04 | % | | | 36.88 | % |
| Allowance for loan losses / non-performing assets | | | 26.56 | % | | | 23.72 | % |
| Allowance for loan losses / total loans | | | 1.23 | % | | | 0.86 | % |
| Loans charged off ( year-to-date) | | $ | 672 | | | $ | 1,149 | |
| Recoveries on loans previously charged off | | | 38 | | | | 49 | |
| | | Three months ended December 31, | | | Year ended December 31, | |
| Selected operating data: | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| | | | | | | | | | | | | |
| Total interest income | | $ | 5,516 | | | $ | 5,829 | | | $ | 22,882 | | | $ | 23,263 | |
| Total interest expense | | | 2,969 | | | | 2,941 | | | | 11,665 | | | | 11,142 | |
| Net interest income | | | 2,547 | | | | 2,888 | | | | 11,227 | | | | 12,121 | |
| Provision for loan losses | | | 650 | | | | 300 | | | | 1,570 | | | | 1,018 | |
| Net interest income after provision | | | 1,897 | | | | 2,588 | | | | 9,657 | | | | 11,103 | |
| Non-interest income: | | | | | | | | | | | | | | | | |
| Deposit account service charges | | | 467 | | | | 454 | | | | 1,838 | | | | 1,766 | |
| Gain on sale of mortgage loans | | | 27 | | | | 41 | | | | 201 | | | | 214 | |
| Gain on sale of securities | | | 4 | | | | 0 | | | | 6 | | | | 0 | |
| Gain(loss) on the sale of real estate owned | | | (947 | ) | | | --- | | | | (1,097 | ) | | | --- | |
| Other non-interest income | | | 308 | | | | 269 | | | | 1,098 | | | | 858 | |
| Total non-interest income | | | (141 | ) | | | 764 | | | | 2,046 | | | | 2,838 | |
| Non-interest expense: | | | | | | | | | | | | | | | | |
| Salaries and benefits | | | 1,058 | | | | 1,185 | | | | 4,488 | | | | 4,590 | |
| Occupancy and equipment, net | | | 341 | | | | 300 | | | | 1,330 | | | | 1,205 | |
| Computer service | | | 129 | | | | 111 | | | | 493 | | | | 425 | |
| Advertising | | | 70 | | | | 112 | | | | 299 | | | | 297 | |
| Other | | | 844 | | | | 463 | | | | 2,712 | | | | 2,076 | |
| Total non-interest expense | | | 2,442 | | | | 2,171 | | | | 9,322 | | | | 8,593 | |
| Income before income taxes | | | (686 | ) | | | 1,181 | | | | 2,381 | | | | 5,348 | |
| Income tax expense | | | (313 | ) | | | 434 | | | | 807 | | | | 1,998 | |
| Net income | | | (373 | ) | | | 747 | | | | 1,574 | | | | 3,350 | |
| | | | | | | | | | | | | | | | | |
| Weighted average number of diluted shares | | | 1,566,242 | | | | 1,613,113 | | | | 1,588,770 | | | | 1,618,632 | |
| Diluted earnings per share | | $ | (0.24 | ) | | $ | 0.46 | | | $ | 0.99 | | | $ | 2.07 | |
| | | | | | | | | | | | | | | | | |
| Return on average equity | | | (4.31 | %) | | | 8.62 | % | | | 4.52 | % | | | 9.88 | % |
| Return on average assets | | | (0.43 | %) | | | 0.81 | % | | | 0.45 | % | | | 0.91 | % |
| Average earning assets | | $ | 319,701 | | | $ | 345,613 | | | $ | 328,426 | | | $ | 348,132 | |
| Net interest margin | | | 3.19 | % | | | 3.34 | % | | | 3.42 | % | | | 3.48 | % |
| Efficiency ratio | | | 139.07 | % | | | 64.75 | % | | | 79.65 | % | | | 61.63 | % |
