101 Main St.
P.O. Box 1628
Lafayette, IN 47902
(765) 742-1064
www.LSBANK.com
| FOR IMMEDIATE RELEASE: | | FOR FURTHER INFORMATION CONTACT: |
| November 6, 2008 | | Randolph F. Williams |
| | | President/CEO |
| | | (765) 742-1064 |
| | | Fax: (765) 429-5932 |
LSB Financial Corp. Announces Third Quarter and Year-to-Date Results
and Payment of a Cash Dividend
Lafayette, IN - LSB Financial Corp. (NASDAQ:LSBI), the parent company of Lafayette Savings Bank, FSB, today reported third quarter earnings of $392,000 or $0.25 per share, and earnings for the first nine months of 2008 of $1,429,000 or $0.92 per share. These results compared to 2007 third quarter and year-to-date earnings of $0.46 and $1.22 per share, are encouraging considering the current economy. Our net portfolio loans were $323.0 million as of the end of September 2008, up almost 9% since year-end, with deposits up 9.6% at $254.2 million for that same period.
LSB President & CEO, Randolph F. Williams stated, “Last quarter we started our comments by saying that the national economic picture was bleak. The recently released Consumer Confidence Index, at an all-time low, confirms consumer worries. The Federal Reserve’s most recent rate lowering of key interest rates is one of several steps intended to help the nation climb out of recession. While improvements in the local economy continue to be encouraging, national economic concerns remain. The unemployment rate for Tippecanoe County dropped to 4.5% in September, while the State of Indiana’s unemployment level dropped to 6.2%. According to the most recent data released by the Office of Federal Housing Enterprise Oversight, the Lafayette market now ranks near the top third of the 292 largest Metropolitan Statistical Areas in housing appreciation with a 12-month increase of 1.33%. Tippecanoe County clearly seems to have weathered the housing storm better than hard-hit markets like Stockton, California and Naples, Florida where the housing appreciation is -31.6% and -22.1% respectively.
Williams continued, “We planned for 2008 to be a difficult year and we are pleased with our progress. Our team continues to work diligently to monitor and improve the credit quality of our loan portfolio. Non-performing loans as of September 30, 2008 were $8.7 million compared to $10.0 million at December 31, 2007 and $11.2 million at September 30, 2007. Out of the $8.7 million of non-performing loans, $1.8 million are loans we have restructured and which are now paying as agreed. Other real estate owned stands at $1.7 million, down 57% from year-end 2007. Our loan loss reserve is at $3.6 million or 1.11% of total loans.
Williams continued, “We continue to see pressure on the net interest margin. For the first nine months of 2008 our margin was 3.02%, a decrease of 47 basis points when compared to the first nine months of 2007. Some of this decrease is a reflection of the prime rate which is currently at 4.00% compared to 7.75% at the same time last year, a decrease of 375 basis points. Conversely, deposit rates are down less than 50 basis points as the liquidity needs of larger banks keep them active in the deposit market. We have attempted to offset these trends by focusing on non-interest income, up 5.3% and managing our non-interest expenses which are up only 1.6% compared to the same period last year”.
Williams added, “Our capital ratio at 9.28% at September 30, 2008, is considered well-capitalized by the federal regulators. As a community bank we focus on maintaining strong capital levels as an assurance that our depositors’ money is safe. Capital is widely considered the first line of defense against unforeseen losses of any type.”
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 November 20, 2008 with a payment date of December 5, 2008. Williams stated, “We are pleased to be able to return equity to our shareholders in the form of a higher dividend. The annualized dividend rate is 6.7% and is particularly valuable based on the favorable dividend tax rate.”
The closing market price of LSB stock on November 5, 2008 was $15.01 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: | | September 30, 2008 | | | December 31, 2007 | |
| | | | | | | |
| Cash and due from banks | | $ | 1,370 | | | $ | 1,644 | |
| Short-term investments | | | 8,281 | | | | 4,846 | |
| Securities available-for-sale | | | 11,938 | | | | 13,221 | |
| Loans held for sale | | | 548 | | | | --- | |
| Net portfolio loans | | | 322,430 | | | | 296,908 | |
| Allowance for loan losses | | | 3,614 | | | | 3,702 | |
| Premises and equipment, net | | | 6,569 | | | | 6,815 | |
| Federal Home Loan Bank stock, at cost | | | 3,997 | | | | 3,997 | |
| Bank owned life insurance | | | 5,784 | | | | 5,613 | |
| Other assets | | | 6,440 | | | | 8,966 | |
| Total assets | | | 367,357 | | | | 342,010 | |
| | | | | | | | | |
| Deposits | | | 254,246 | | | | 232,030 | |
| Advances from Federal Home Loan Bank | | | 76,756 | | | | 74,256 | |
| Other liabilities | | | 2,246 | | | | 1,792 | |
| | | | | | | | | |
| Shareholders’ equity | | | 34,109 | | | | 33,932 | |
| Book value per share | | $ | 21.96 | | | $ | 21.78 | |
| Equity / assets | | | 9.28 | % | | | 9.92 | % |
| Total shares outstanding | | | 1,553,525 | | | | 1,557,968 | |
| | | | | | | | | |
| Asset quality data: | | | | | | | | |
| Non-accruing loans | | $ | 6,905 | | | $ | 8,317 | |
| Loans past due 90 days still on accrual | | | --- | | | | 59 | |
| Loans restructured in the last 12 months | | | 1,778 | | | | 1,618 | |
| Other real estate / assets owned | | | 1,686 | | | | 3,944 | |
| Total non-performing assets | | | 10,369 | | | | 13,938 | |
| Non-performing loans / total loans | | | 2.69 | % | | | 3.37 | % |
| Non-performing assets / total assets | | | 2.82 | % | | | 4.08 | % |
| Allowance for loan losses / non-performing loans | | | 41.62 | % | | | 37.04 | % |
| Allowance for loan losses / non-performing assets | | | 34.85 | % | | | 26.56 | % |
| Allowance for loan losses / total loans | | | 1.11 | % | | | 1.23 | % |
| Loans charged off | | $ | 959 | | | $ | 672 | |
| Recoveries on loans previously charged off | | | 19 | | | | 38 | |
| | | Three months ended September 30, | | | Nine months ended September 30, | |
| Selected operating data: | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | |
| Total interest income | | $ | 5,295 | | | $ | 5,769 | | | $ | 16,090 | | | $ | 17,366 | |
| Total interest expense | | | 2,855 | | | | 2,929 | | | | 8,507 | | | | 8,686 | |
| Net interest income | | | 2,440 | | | | 2,840 | | | | 7,583 | | | | 8,680 | |
| Provision for loan losses | | | 352 | | | | 180 | | | | 852 | | | | 920 | |
| Net interest income after provision | | | 2,088 | | | | 2,660 | | | | 6,731 | | | | 7,760 | |
| Non-interest income: | | | | | | | | | | | | | | | | |
| Deposit account service charges | | | 465 | | | | 486 | | | | 1,293 | | | | 1,371 | |
| Gain on sale of mortgage loans | | | 34 | | | | 37 | | | | 58 | | | | 174 | |
| Gain(loss) on sale of securities and other assets | | | 11 | | | | (115 | ) | | | 31 | | | | (148 | ) |
| Other non-interest income | | | 288 | | | | 293 | | | | 920 | | | | 790 | |
| Total non-interest income | | | 798 | | | | 701 | | | | 2,302 | | | | 2,187 | |
| Non-interest expense: | | | | | | | | | | | | | | | | |
| Salaries and benefits | | | 1,095 | | | | 996 | | | | 3,467 | | | | 3,430 | |
| Occupancy and equipment, net | | | 361 | | | | 320 | | | | 1,046 | | | | 990 | |
| Computer service | | | 138 | | | | 127 | | | | 409 | | | | 364 | |
| Advertising | | | 61 | | | | 77 | | | | 201 | | | | 229 | |
| Other | | | 689 | | | | 702 | | | | 1,869 | | | | 1,868 | |
| Total non-interest expense | | | 2,344 | | | | 2,222 | | | | 6,992 | | | | 6,881 | |
| Income before income taxes | | | 542 | | | | 1,139 | | | | 2,041 | | | | 3,066 | |
| Income tax expense | | | 150 | | | | 422 | | | | 612 | | | | 1,120 | |
| Net income | | | 392 | | | | 717 | | | | 1,429 | | | | 1,946 | |
| | | | | | | | | | | | | | | | | |
| Weighted average number of diluted shares | | | 1,554,245 | | | | 1,573,546 | | | | 1,557,381 | | | | 1,594,100 | |
| Diluted earnings per share | | $ | 0.25 | | | $ | 0.46 | | | $ | 0.92 | | | $ | 1.22 | |
| | | | | | | | | | | | | | | | | |
| Return on average equity | | | 4.58 | % | | | 8.27 | % | | | 5.57 | % | | | 7.43 | % |
| Return on average assets | | | 0.43 | % | | | 0.83 | % | | | 0.53 | % | | | 0.73 | % |
| Average earning assets | | $ | 344,590 | | | $ | 323,013 | | | $ | 334,301 | | | $ | 331,335 | |
| Net interest margin | | | 2.83 | % | | | 3.52 | % | | | 3.02 | % | | | 3.49 | % |
| Efficiency ratio | | | 81.22 | % | | | 66.11 | % | | | 77.41 | % | | | 69.18 | % |
