LSB Financial Corp. Announces Year-end and Fourth Quarter Results
and Payment of a Cash Dividend
LSB Financial Corp. (NASDAQ:LSBI), the parent company of Lafayette Savings Bank, FSB, today reported unaudited net income for 2009 of $460,000 or $0.30 per share, compared to net income of $1.74 million or $1.12 per share for 2008, a decrease in both earnings and earnings per share of 73.2%. Net income was significantly impacted by asset-quality related issues, and the effect was primarily seen in our provision for loan losses for the year of $3.2 million compared to $1.1 million in 2008. $1.4 million of that allocation was made in the fourth quarter due to credit concerns identified in that quarter which resulted in a net loss for the fourth quarter of $178,000 compared to income of $312,000 in the fourth quarter of 2008.
LSB President and CEO Randolph F. Williams stated, “Although this decrease in earnings is disappointing, I am pleased to end the year in a positive income position. Unfortunately the local economy stubbornly continued to underperform expectations and the resulting loan delinquencies and foreclosures drove the need to make this substantial provision for losses despite our best efforts to work with struggling borrowers. While our economy continues to show signs of improvement on paper, we believe the prudent step is to proactively set aside dollars to offset losses that might still exist in our loan portfolio.”
Mr. Williams continued, “We are pleased to note that our pre-tax, pre-provision income was actually higher in 2009 than the previous year, which is quite an accomplishment since we also absorbed a $489,000 increase in our FDIC premiums in 2009. Net interest income increased from $10.0 million in 2008 to $10.3 million in 2009 primarily because of a $2.0 million or 17.3% decrease in our interest expense. This improvement was largely due to lower rates in the economy. Our deposits were actually up $19.3 million from last year as our branch bankers capitalized on depositors’ desire to move to the safety of FDIC insurance protected deposits. Some of the growth in deposits went toward paying off higher rate Federal Home Loan Bank advances and other high rate deposits. Interest income on loans decreased $1.4 million due to lower rates and the loss in interest income on loans that are no longer performing.”
Mr. Williams also reported, “Our non-interest income also increased substantially from $2.9 million in 2008 to $3.8 million in 2009 largely due to $1.4 million in fees from the sale of $68.7 million of residential loans. Fixed rate loans reached historically low rates in 2009 and many borrowers took advantage of the opportunity to refinance their existing loans. Others tapped into the first-time home buyer tax credit and purchased a first home in 2009. We offer our residential borrowers the opportunity to choose to have their mortgage loan serviced here or to select from the mortgage products and rates available at other financial institutions for which we make the loan here and then sell the loan to the designated loan servicer.”
The Company also announced that it will pay a quarterly dividend of $0.125 per share to shareholders of record as of the close of business on March 19, 2010 with a payment date of March 31, 2010. Mr. Williams said, “This delayed announcement of the quarterly dividend was tied to the completion of our audit and of a review of our loan portfolio. We needed to complete the external audit before we felt comfortable with the dividend.” Mr. Williams continued, “This will be the fifth consecutive quarter where we have paid the $0.125 dividend, which represents a dividend yield of 5%. Because we continue to maintain capital in excess of regulatory “well-capitalized” minimums and because we believe our core business to be sound, we believe the payment of this dividend is warranted.”
The closing price of LSB stock on March 4, 2010 was $10.05 per share as reported by the Nasdaq Global 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, 2009 | | | Year ended
December 31, 2008 | |
| | | | | | | |
| Cash and due from banks | | $ | 8.084 | | | $ | 2,046 | |
| Short-term investments | | | 4,817 | | | | 9,179 | |
| Securities available-for-sale | | | 11,345 | | | | 11,853 | |
| Loans held for sale | | | 3,303 | | | | 1,342 | |
| Net portfolio loans | | | 317,860 | | | | 325,297 | |
| Allowance for loan losses | | | 3,737 | | | | 3,697 | |
| Premises and equipment, net | | | 6,209 | | | | 6,461 | |
| Federal Home Loan Bank stock, at cost | | | 3,997 | | | | 3,997 | |
| Bank owned life insurance | | | 6,071 | | | | 5,841 | |
| Other assets | | | 9,364 | | | | 6,996 | |
| Total assets | | | 371,050 | | | | 373,012 | |
| | | | | | | | | |
| Deposits | | | 277,866 | | | | 258,587 | |
| Advances from Federal Home Loan Bank | | | 57,000 | | | | 78,500 | |
| Other liabilities | | | 2,300 | | | | 1,850 | |
| | | | | | | | | |
| Shareholders’ equity | | | 33,884 | | | | 34,075 | |
| Book value per share | | $ | 21.81 | | | $ | 21.93 | |
| Equity / assets | | | 9.13 | % | | | 9.14 | % |
| Total shares outstanding | | | 1,553,525 | | | | 1,553,525 | |
| | | | | | | | | |
| Asset quality data: | | | | | | | | |
| Non-accruing loans | | $ | 12,554 | | | $ | 7,976 | |
| Loans past due 90 days still on accrual | | | 0 | | | | 0 | |
| Other real estate / assets owned | | | 1,892 | | | | 1,412 | |
| Total non-performing assets | | | 14,446 | | | | 9,388 | |
| Non-performing loans / total loans | | | 3.91 | % | | | 2.41 | % |
| Non-performing assets / total assets | | | 3.89 | % | | | 2.52 | % |
| Allowance for loan losses / non-performing loans | | | 29.77 | % | | | 46.35 | % |
| Allowance for loan losses / non-performing assets | | | 25.87 | % | | | 39.38 | % |
| Allowance for loan losses / total loans | | | 1.16 | % | | | 1.12 | % |
| Loans charged off (year-to-date) | | $ | 3,186 | | | $ | 1,183 | |
| Recoveries on loans previously charged off | | | 28 | | | | 77 | |
| | | Three months ended December 31, | | | Year ended December 31, | |
| Selected operating data: | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | | | | | |
| Total interest income | | $ | 4,754 | | | $ | 5,229 | | | $ | 19,659 | | | $ | 21,319 | |
| Total interest expense | | | 1,964 | | | | 2,779 | | | | 9,335 | | | | 11,286 | |
| Net interest income | | | 2,790 | | | | 2,450 | | | | 10,324 | | | | 10,033 | |
| Provision for loan losses | | | 1,375 | | | | 250 | | | | 3,197 | | | | 1,102 | |
| Net interest income after provision | | | 1,415 | | | | 2,200 | | | | 7,127 | | | | 8,931 | |
| Non-interest income: | | | | | | | | | | | | | | | | |
| Deposit account service charges | | | 431 | | | | 444 | | | | 1,525 | | | | 1,736 | |
| Gain on sale of mortgage loans | | | 246 | | | | 58 | | | | 1,386 | | | | 117 | |
| Gain on sale of securities | | | — | | | | — | | | | — | | | | — | |
| Gain(loss) on the sale of real estate owned | | | (77 | ) | | | (186 | ) | | | (183 | ) | | | (156 | ) |
| Other non-interest income | | | 281 | | | | 273 | | | | 1,059 | | | | 1,194 | |
| Total non-interest income | | | 881 | | | | 589 | | | | 3,787 | | | | 2,891 | |
| Non-interest expense: | | | | | | | | | | | | | | | | |
| Salaries and benefits | | | 1,159 | | | | 1,118 | | | | 5,137 | | | | 4,585 | |
| Occupancy and equipment, net | | | 312 | | | | 336 | | | | 1,307 | | | | 1,382 | |
| Computer service | | | 138 | | | | 140 | | | | 562 | | | | 549 | |
| Advertising | | | 104 | | | | 93 | | | | 301 | | | | 294 | |
| Other | | | 963 | | | | 606 | | | | 3,196 | | | | 2,476 | |
| Total non-interest expense | | | 2,676 | | | | 2,293 | | | | 10,503 | | | | 9,286 | |
| Income before income taxes | | | (380 | ) | | | 496 | | | | 411 | | | | 2,536 | |
| Income tax expense | | | (202 | ) | | | 184 | | | | (49 | ) | | | 796 | |
| Net income | | | (178 | ) | | | 312 | | | | 460 | | | | 1,740 | |
| | | | | | | | | | | | | | | | | |
| Weighted average number of diluted shares | | | 1,554,723 | | | | 1,552,986 | | | | 1,554,707 | | | | 1,556,169 | |
| Diluted earnings per share | | $ | (0.11 | ) | | $ | 0.20 | | | $ | 0.30 | | | $ | 1.12 | |
| | | | | | | | | | | | | | | | | |
| Return on average equity | | | (2.08 | )% | | | 3.65 | % | | | 1.34 | % | | | 5.08 | % |
| Return on average assets | | | (0.19 | )% | | | 0.34 | % | | | 0.12 | % | | | 0.48 | % |
| Average earning assets | | $ | 341,428 | | | $ | 347,846 | | | $ | 351,757 | | | $ | 337,686 | |
| Net interest margin | | | 3.27 | % | | | 2.82 | % | | | 2.94 | % | | | 2.97 | % |
| Efficiency ratio | | | 116.55 | % | | | 82.22 | % | | | 96.23 | % | | | 78.62 | % |
