EXHIBIT 99
FOR IMMEDIATE RELEASE
CONTACT:
JAMES H. WEBER
SENIOR VICE PRESIDENT,
MARKETING AND INVESTOR
RELATIONS OFFICER
TEL: (440) 989-3005
LNB BANCORP, INC., REPORTS 2003 EARNINGS
LORAIN, OHIO--January 28, 2004--LNB BANCORP, INC. (NASDAQ: LNBB), today
announced financial results for the fourth quarter and year ended December 31,
2003. All 2002 financial statements and related per-share amounts herein have
been restated to reflect the adoption of Statement of Financial Accounting
Standards (SFAS) No. 147 "Acquisitions of Certain Financial Institutions" and
SFAS No. 142 "Goodwill and Other Intangible Assets" as related to intangibles.
Per Share amounts have also been adjusted to reflect a two-percent stock
dividend on July 2, 2002 and a three-for-two stock split on March 14, 2003.
LNB Bancorp, Inc., parent financial holding company of The Lorain National Bank,
reported earnings of $845,000 or $.13 per basic and diluted share, for the
fourth quarter, down from the $2.5 million or $.37 per basic and diluted share,
reported for the same period a year ago. This decline in fourth-quarter earnings
resulted from continued margin pressure and severance expenses related to both
the retirement of the former President and the previously announced layoff of 20
employees. Total revenues generated during the fourth quarter of 2003 decreased
eight percent to $9.5 million compared with $10.4 million for the fourth quarter
of 2002.
Full-year earnings for 2003 were $7.7 million compared with $9.2 million in
2002. Earnings per basic and diluted share for 2003 decreased to $1.17 from
$1.39 a year ago. The return on average assets for 2003 decreased to 1.05
percent compared with 1.33 percent in 2003. The return on average shareholders'
equity was 11.33 percent for 2003 as compared to 14.24 percent in 2002. For the
full year, total revenues were flat at $40.3 million compared with last year.
Continued compression of net interest income, combined with the severance
expenses impacted this year's financial results.
In 2003, net interest income decreased by $520,000, or 1.8 percent to $28.7
million. The current rate environment, coupled with the weak local economy and
competitive pricing pressure have negatively affected the Bancorp's net interest
margin.
The loan loss provision increased to $2.7 million during 2003 compared with $2.2
million in 2002. This was attributable to the weak local economy, changes in
portfolio mix and an increase in nonperforming assets to $5.2 million at
year-end 2003. LNB Bancorp's allowance for loan losses has increased from 1.31
percent of gross loans outstanding at December 31, 2002, to 1.45 percent at
December 31, 2003.
Noninterest income grew by 4.2 percent during the year, driven primarily by an
$832,000 gain on the sale of the Bancorp's credit card portfolio. Also
contributing to this result were increases in
the gains on sale of loans of $142,000 and increases in services charges on
deposit accounts of $177,000. Offsetting a portion of these increases were
continued weakness in Investment and Trust Income which declined $318,000, and a
decrease in the gains on sale of securities of $283,000.
Noninterest expense was $26.5 million in 2003, an increase of $1.7 million. This
increase was principally related to severance expenses of $1.7 million, combined
with increases in occupancy expense, furniture and equipment expense and outside
services. With the exception of the non-recurring severance expenses, the
increases experienced in other areas were offset by cost containment efforts in
salary and employee benefits, marketing and loan collection expenses.
At December 31, 2003, LNB Bancorp, Inc., achieved growth in assets, loans,
deposits, dividends and shareholders' equity from one year ago. Total assets
rose four percent to $741.0 million from $715.4 million at year-end 2002. In
this economic environment, LNB Bancorp, Inc., is following a strategy of
moderate balance sheet growth funded by retail deposits and the targeted use of
Federal Home Loan Bank funding.
Loans grew five percent to $526.6 million at December 31, 2003, an increase of
$23.7 million. This was led by a 17 percent increase in its commercial loan
portfolio and an 18 percent increase in home equity lines of credit outstanding.
LNB Bancorp's loan growth was partially offset by a refinancing-induced decline
in residential mortgage loans, the sale of the credit card portfolio and
decreases in personal loans.
Deposits grew to $581.3 million at December 31, 2003, up from $566.1 million
last year. This represents a three percent increase. Growth in deposits from
demand, savings, certificates of deposit and interest-bearing checking accounts
was partially offset by declines in money market and market access accounts. The
growth in certificates of deposit was primarily the result of higher public fund
deposits, while growth in interest-bearing checking accounts and demand deposits
were attributable to the positive effects of the Bancorp's High Performance
checking products.
Other borrowings increased $10.8 million, or 14 percent, to $86.6 million at
December 31, 2003, as compared to one year ago. This increase in other
borrowings is attributable to increases in Federal Home Loan Bank advances of
$22.6 million, offset in part by decreases in repurchase agreements and Federal
funds purchased totaling $11.8 million.
Shareholders' equity totaled $68.5 million at December 31, 2003, an increase of
$1.9 million, or three percent, from one year ago. Book value per share
increased $.26 to $10.35 at December 31, 2003, from $10.09 at year-end 2002. The
2003 year-end ratio of average shareholders' equity to average assets remained
strong at nine percent.
LNB Bancorp, Inc., and Lorain National Bank exceed all applicable regulatory
capital requirements. Under Federal Deposit Insurance Corporation (FDIC)
guidelines, Lorain National Bank is categorized as "well capitalized"--the
highest rating category available.
Cash dividends declared per share increased $.02 in 2003, or three percent, to
$.70 per share--up from $.68 per share in 2002. In each of the last 20 years,
the Board of Directors has approved an increase in the annual cash dividend per
share. Total cash dividends declared in 2003, including the $.02 extra dividend
declared by the Board in November, rose to $4.6 million.
LNB Bancorp, Inc.'s Annual Meeting of Shareholders will be held Tuesday, April
20, 2004, at 10:00 a.m. Eastern Time. A detailed analysis of LNB Bancorp, Inc.'s
2003 financial performance will be included in its 2003 Annual Report, which
will be released in March.
ABOUT LNB BANCORP, INC.
LNB Bancorp, Inc., is a $741 million financial holding company with two wholly
owned subsidiaries: The Lorain National Bank and Charleston Insurance Agency,
Inc. and a 49-percent owned subsidiary, Charleston Title Agency, LLC. LNB
Bancorp's primary subsidiary, The Lorain National Bank, provides a full spectrum
of financial services, including full-service community banking, specializing in
commercial, mortgage and personal banking services, and investment and trust
services. Lorain National Bank also offers long-term, fixed-rate mortgages via
the secondary mortgage market. Brokerage services including stocks, bonds,
mutual funds and variable-annuity investments are also offered at Lorain
National Bank through Raymond James Financial Services, Inc. (member NASD/SIPC),
a registered broker/dealer. North Coast Community Development Corporation, a
wholly owned subsidiary of The Lorain National Bank, is a community development
entity (CDE) formed and approved in 2002, that provides qualified businesses
with debt financing including commercial mortgage, construction, and commercial
equipment loans aimed at stimulating economic growth and job creation in low-
and moderate-income census tracts in Lorain, County, Ohio. Charleston Insurance
Agency, Inc., offers life, accident, health and long-term-care insurance and
fixed-annuity products. Charleston Title Agency, LLC offers traditional title
services.
Lorain National Bank serves customers through 20 retail-banking centers and 23
ATMs in Ohio's Lorain, eastern Erie, and western Cuyahoga counties. For more
information about LNB Bancorp, Inc., and its related products and services or to
view its filings with the Securities and Exchange Commission, including Forms
10-K, 10-Q and 8-K, please visit http://www.4lnb.com.
This press release contains forward-looking statements based on current
expectations that are covered under the "safe-harbor" provisions of the
Securities Litigation Reform Act of 1995. Certain forward-looking statements,
which involve inherent risks and uncertainties, are described in LNB Bancorp's
filings with the Securities and Exchange Commission. A number of important
factors could cause actual results to differ materially from those in the
forward-looking statements. Those factors 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.
-Financial Highlights Follow-
LNB BANCORP, INC.
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER-SHARE DATA; UNAUDITED)
PERCENT
THREE MONTHS ENDED DECEMBER 31, 2003 2002 CHANGE
- ----------------------------------------------- --------------- --------------- ------------
Net interest income $ 7,101 $ 7,544 (6)%
Noninterest income 2,448 2,829 (13)%
--------------- ---------------
Revenue $ 9,549 $ 10,373 (8)%
Provision for loan losses 570 475 20%
Noninterest expenses 7,829 6,345 23%
--------------- ---------------
Income before income taxes $ 1,150 $ 3,553 (68)%
Income taxes 305 1,063 (71)%
--------------- ---------------
Net income $ 845 $ 2,490 (66)%
PER-SHARE DATA:
Earnings (basic and diluted)(1) $ 0.13 $ 0.37 (65)%
Cash dividends declared (1) $ 0.19 $ 0.18 6%
Weighted average shares outstanding:
Basic(1) 6,610,119 6,601,825
Diluted(1) 6,619,186 6,610,405
PERCENT
YEARS ENDED DECEMBER 31, 2003 2002 CHANGE
- -------------------------------------------------- --------------- --------------- ------------
Net interest income $ 28,749 $ 29,269 (2)%
Noninterest income 11,541 11,068 4%
--------------- ---------------
Revenue $ 40,290 $ 40,337 0%
Provision for loan losses 2,695 2,220 23%
Noninterest expenses 26,469 24,772 7%
--------------- ---------------
Income before income taxes $ 11,126 $ 13,365 (17)%
Income taxes 3,411 4,200 (19)%
--------------- ---------------
Net income $ 7,715 $ 9,165 (16)%
FINANCIAL RATIOS:
Annualized return on average assets 1.05% 1.33%
Annualized return on average equity 11.33% 14.24%
Net interest margin 4.18% 4.52%
Efficiency ratio 62.26% 62.08%
Loan loss reserve/gross loans 1.45% 1.31%
PER-SHARE DATA:
Earnings (basic and diluted) (1) $ 1.17 $ 1.39 (16)%
Cash dividends declared (1) $ 0.70 $ 0.68 3%
Weighted average shares outstanding:
Basic (1) 6,606,560 6,601,069
Diluted (1) 6,614,627 6,607,393
PERCENT
AT DECEMBER 31, 2003 2002 CHANGE
----------------------------------------------- --------------- --------------- --------
Total assets $ 741,024 $ 715,399 4%
Net loans $ 526,581 $ 502,897 5%
Total deposits $ 581,344 $ 566,127 3%
Other borrowings $ 86,568 $ 75,791 14%
Total shareholders' equity $ 68,516 $ 66,613 3%
Book value per share (1) $ 10.35 $ 10.09 3%
(1) Adjusted to reflect stock splits and stock dividends