- First quarter net income available
to common shareholders of $1.57 million, an increase of 19.8% as
compared to the same quarter one year ago
- New SBA Lending Group generated over
$12 million in loans, first quarter gain on sale of
$495,000
- Nonperforming assets declined by
$7.8 million, a decrease of 26% from the first quarter a year
ago
LNB Bancorp, Inc. (NASDAQ: LNBB) (“LNB” or the “Company”) today
reported financial results for the first quarter 2014. Net income
available to common shareholders for the first quarter 2014 was
$1,571,000, or $0.16 per common share, compared to $856,000, or
$0.10 per common share, for the year-ago quarter which included
Supplemental Executive Retirement Plan (SERP) compensation expense
of $455,000, net of tax. Excluding the SERP expense, the adjusted
net income available to common shareholders totaled $1,311,000 in
the first quarter of 2013. The adjusted net income available to
common shareholders increased $260,000, or 19.8%, from the first
quarter 2013 to the first quarter 2014.
“Gain on the sale of loans was $703,000 for the quarter,
compared to $656,000 for the first quarter of 2013. This increase
is primarily due to the gain on the sale of SBA (Small Business
Administration) loans of $495,000, offset by a decline in mortgage
loan sales. We continue to see strong results from our new SBA
Lending Group. Since the group’s inception in the fourth quarter of
2013, they have generated over $12 million in loans to medical,
dental, veterinary and funeral home businesses. Our new SBA Lending
income exceeded the reduction of our fee income from mortgage loan
sales. Our mortgage fee income has declined as the market
transitioned from heavy refinance volume to a lower level of
activity based primarily on purchases,” stated Daniel E. Klimas,
president and chief executive officer of LNB Bancorp.
Net interest income was $9.0 million for the first quarter of
2014, compared to $8.7 million in the first quarter of the prior
year, an increase of 3.0%. The net interest margin (FTE) for the
first quarter of 2014 was 3.21%, a decline of 2 basis points from
the first quarter of 2013.
Loan balances grew by 2.2% compared to the first quarter of
2013, led by the commercial and indirect auto loan portfolios.
The Company continued to make progress on improving credit
quality as non-performing assets declined nearly $8 million from
the same quarter in 2013. The ratio of non-performing assets to
total assets at March 31, 2014, was 1.74%, down from 2.41% at March
31, 2013.
The provision for loan losses was $900,000 in the first quarter
of 2014, down $450,000 from the first quarter of 2013, reflecting
the Company’s improvement in credit quality. Net charge-offs were
$908,000 for the first quarter of 2014, or 0.41% of average loans
(annualized), compared to $1.2 million, or 0.54% of average loans
(annualized), in the first quarter of 2013.
Trust and Investment Management fee income was $400,000 in the
first quarter, an increase of 6.7% compared to the first quarter in
2013. “During the first quarter we saw a nice increase in new
relationships and we look to continue growing this business in
2014,” stated Daniel E. Klimas. Noninterest income was $2.9 million
for the first quarter of 2014 compared to $3.3 million for the
prior-year first quarter. This year over year decrease was driven
primarily by a slower mortgage loan market, lower account fee
income due in part to the severe winter affecting consumers and no
gains taken in the first quarter on the securities portfolio.
Noninterest expense was $8.9 million for the first quarter of
2014 compared with $9.3 million for the first quarter of 2013.
Excluding the pre-tax expense for SERP compensation of $690,000 in
the first quarter of 2013, noninterest expenses would have shown a
3.1% increase compared to the first quarter of 2013, largely as a
result of the additional expense associated with the new SBA
Lending business.
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 12.15%, Tier 1 leverage
ratio of 8.61% and tangible common equity to tangible assets of
6.90% at March 31, 2014.
As previously announced, on January 17, 2014, the Company
completed the repurchase and redemption of all of its remaining
outstanding shares of Fixed Rate Cumulative Perpetual Preferred
Stock, Series B.
Total assets at March 31, 2014 were $1.26 billion, up $24
million, or 2.0%, from March 31, 2013. Total deposits at March 31,
2014 were $1.08 billion, up $28 million, or 2.6%, from March 31,
2013.
About LNB Bancorp, Inc.
LNB Bancorp, Inc. is a $1.3 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 March 31, 2014 At
December 31, 2013 (unaudited)
(Dollars in thousands except share amounts) ASSETS
Cash and due from banks
$ 38,939 $ 36,717 Federal
funds sold and interest bearing deposits in banks
29,302 15,555
Cash and cash equivalents
68,241 52,272 Securities available
for sale, at fair value
217,510 216,122 Restricted stock
5,741 5,741 Loans held for sale
1,811 4,483 Loans:
Portfolio loans
910,189 902,299 Allowance for loan losses
(17,497 )
(17,505 ) Net loans
892,692 884,794
Bank premises and equipment, net
8,013 8,198 Other
real estate owned
979 579 Bank owned life insurance
19,532 19,362 Goodwill, net
21,582 21,582 Intangible
assets, net
424 457 Accrued interest receivable
3,774
3,621 Other assets
15,094
13,046 Total Assets
$ 1,255,393
$ 1,230,257 LIABILITIES
AND SHAREHOLDERS' EQUITY Deposits Demand and other
noninterest-bearing
$ 149,530 $ 148,961 Savings,
money market and interest-bearing demand
430,142 393,778
Certificates of deposit
497,179
502,850 Total deposits
1,076,851 1,045,589
Short-term borrowings
3,725 4,576 Federal Home Loan
Bank advances
46,760 46,708 Junior subordinated debentures
16,238 16,238 Accrued interest payable
701 789
Accrued taxes, expenses and other liabilities
4,004 4,901
Total Liabilities 1,148,279
1,118,801 Shareholders'
Equity Fixed rate cumulative preferred stock, Series B, no par
value, $1,000 liquidation value, no shares were issued at March 31,
2014 and 7,689 shares were 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 10,001,717 at March 31,
2014 and 10,001,717 at December 31, 2013.
10,002 10,002 Additional paid-in capital
51,166
51,098 Retained earnings
55,440 53,966 Accumulated other
comprehensive income (loss)
(3,317 ) (5,188 )
Treasury shares at cost, 336,745 shares at March 31, 2014 and
328,194 at December 31, 2013
(6,177
) (6,092 )
Total Shareholders' Equity
107,114 111,456
Total Liabilities and Shareholders' Equity
$ 1,255,393
$ 1,230,257
Consolidated Statements of Income (unaudited)
Three Months
EndedMarch 31,
Three Months EndedMarch
31,
2014
2013
(Dollars in thousands except share and per share amounts)
Interest Income Loans
$ 8,928 $ 9,054
Securities: U.S. Government agencies and corporations
1,028
841 State and political subdivisions
303 289 Other debt and
equity securities
117 70 Federal funds sold and short-term
investments
17
20 Total interest income
10,393 10,274
Interest Expense Deposits
1,082 1,249 Federal
Home Loan Bank advances
155 155 Short-term borrowings
27 - Junior subordinated debenture
168 166 Total
interest expense
1,432
1,570 Net Interest Income 8,961
8,704
Provision for Loan Losses
900 1,350 Net
interest income after provision for loan losses
8,061 7,354
Noninterest Income Investment and trust services
400 375 Deposit service charges
770 816 Other service
charges and fees
753 831 Income from bank owned life
insurance
169 168 Other income
151 321 Total
fees and other income
2,243 2,511 Securities gains, net
- 178 Gains on sale of loans
703 656 Loss on sale of
other assets, net
(34
) (13 ) Total
noninterest income
2,912 3,332
Noninterest
Expense Salaries and employee benefits
4,595 5,027
Furniture and equipment
1,148 949 Net occupancy
613
588 Professional fees
494 490 Marketing and public relations
400 289 Supplies, postage and freight
214 307
Telecommunications
151 162 Ohio Franchise tax
224 308
FDIC assessments
272 242 Other real estate owned
24
77 Loan and collection expense
298 388 Other expense
426 454 Total
noninterest expense
8,859
9,281 Income before income tax expense
2,114 1,405 Income tax expense
508 292
Net Income $
1,606 $ 1,113
Dividends and accretion on preferred stock
35 257 Net
Income Available to Common Shareholders $
1,571 $ 856
Net Income Per Common Share Basic
$
0.16 $ 0.10 Diluted
0.16 0.10 Dividends declared
0.01 0.01
Average Common Shares Outstanding Basic
9,668,297
8,201,120 Diluted
9,705,432
8,212,038 LNB Bancorp, Inc. Supplemental
Financial Information (Unaudited - Dollars in thousands except
Share and Per Share Data)
Three Months Ended
March 31, December 31,
September 30, June 30, March 31,
END OF PERIOD BALANCES
2014 2013 2013
2013 2013 Cash and Cash Equivalents
$
68,241 $ 52,272 $ 47,090 $ 49,534 $ 54,954 Securities
217,510 216,122 215,290 228,766 223,173 Restricted stock
5,741 5,741 5,741 5,741 5,741 Loans held for sale
1,811 4,483 2,110 3,423 6,250 Portfolio loans
910,189
902,299 891,300 882,896 889,931 Allowance for loan losses
17,497 17,505
17,791 17,815
17,806 Net loans
892,692 884,794 873,509
865,081 872,125 Other assets
69,398
66,845 66,762
65,701 68,940 Total assets
$ 1,255,393 $
1,230,257 $ 1,210,502
$ 1,218,246 $
1,231,183 Total deposits
1,076,851 1,045,589
1,032,245 1,039,279 1,049,176 Other borrowings
66,723 67,522
64,539 64,704 64,684 Other liabilities
4,705 5,690
5,757 5,369
7,118 Total liabilities
1,148,279 1,118,801
1,102,541 1,109,352 1,120,978 Total shareholders' equity
107,114 111,456
107,961 108,894
110,205 Total liabilities and shareholders' equity
$ 1,255,393 $
1,230,257 $ 1,210,502
$ 1,218,246 $
1,231,183 AVERAGE BALANCES Assets: Total
assets
$ 1,234,380 $ 1,221,830 $ 1,213,502 $
1,233,694 $ 1,195,630 Earning assets*
1,150,500 1,137,943
1,130,695 1,147,869 1,113,292 Securities
217,753 214,860
222,229 225,644 207,791 Portfolio loans
906,843 899,899
883,321 882,499 884,893 Liabilities and shareholders' equity: Total
deposits
$ 1,055,980 $ 1,041,763 $ 1,036,149 $
1,053,952 $ 1,016,968 Interest bearing deposits
910,340
891,589 896,937 914,652 879,208 Interest bearing liabilities
978,073 956,866 961,636 979,260 943,566 Total shareholders'
equity
106,681 109,814 108,025 110,619 110,416
INCOME STATEMENT Total Interest Income
$
10,393 $ 10,525 $ 10,304 $ 10,576 $ 10,274 Total Interest
Expense
1,432 1,490
1,529 1,567
1,570 Net interest income
8,961 9,035 8,775
9,009 8,704 Provision for loan losses
900 1,025 950 1,050
1,350 Other income
2,243 2,524 2,062 2,519 2,511 Net gain on
sale of assets
669 732 404 553 821 Noninterest expense
8,859 8,983
8,301 8,622
9,281 Income before income taxes
2,114 2,283
1,990 2,409 1,405 Income tax expense
508
577 471
586 292 Net income
1,606
1,706 1,519 1,823 1,113 Preferred stock dividend and accretion
35 163
109 117 257
Net income available to common shareholders
$
1,571 $ 1,543
$ 1,410 $ 1,706
$ 856 Common cash dividend declared and
paid
$ 97 $
93 $ 93 $
93 $ 79 Net interest
income-FTE (1)
$ 9,117 $ 9,192 $ 8,934 $ 9,169 $
8,860 Total Operating Revenue (4)
$ 12,029 $ 12,448 $
11,400 $ 12,241 $ 12,192 Three
Months Ended
March 31, December 31, September
30, June 30, March 31,
2014 2013 2013 2013 2013
PER SHARE DATA Basic net income per common share
$
0.16 $ 0.16 $ 0.15 $ 0.18 $ 0.10 Diluted net income per
common share
0.16 0.16 0.15 0.18 0.10 Cash dividends per
common share
0.01 0.01 0.01 0.01 0.01 Book value per common
shares outstanding
11.08 10.73 10.62 10.36 10.87 Tangible
book value per common shares outstanding**
8.81 8.45 8.25
8.35 8.49 Period-end common share market value
11.42 10.03
9.40 8.59 8.31 Market as a % of tangible book
129.69
% 118.69 % 113.93 % 102.90 % 97.93 % Basic average common
shares outstanding
9,668,297 9,379,355 9,303,702 9,303,702
8,201,120 Diluted average common shares outstanding
9,705,432 9,404,651 9,323,657 9,319,142 8,212,038 Common
shares outstanding
9,664,972 9,673,523 9,303,702 9,303,702
9,303,702
KEY RATIOS Return on average assets (2)
0.53 % 0.55 % 0.50 % 0.59 % 0.38 % Return on average
common equity (2)
6.11 % 6.16 % 5.58 % 6.61 % 4.09 %
Efficiency ratio
73.65 % 72.16 % 72.82 % 70.44 %
76.12 % Noninterest expense to average assets (2)
2.91
% 2.92 % 2.71 % 2.80 % 3.15 % Average equity to average
assets
8.64 % 8.99 % 8.90 % 8.97 % 9.23 % Net
interest margin (FTE) (1)
3.21 % 3.20 % 3.13 % 3.20 %
3.23 % Common stock dividend payout ratio
6.18 % 6.10
% 6.61 % 5.46 % 9.59 % Common stock market capitalization
$
110,374 $ 97,025 $ 87,455 $ 79,919 $ 77,314
ASSET QUALITY Allowance for Loan Losses Allowance for
loan losses, beginning of period
$ 17,505 $ 17,791 $
17,815 $ 17,806 $ 17,637 Provision for loan losses
900 1,025
950 1,050 1,350 Charge-offs
998 1,570 1,354 1,667 1,428
Recoveries
90
259 380
626 247 Net
charge-offs
908
1,311 974
1,041 1,181
Allowance for loan losses, end of period
$
17,497 $
17,505 $ 17,791
$ 17,815 $
17,806 Nonperforming Assets
Nonperforming loans
$ 20,918 $ 21,986 $ 24,977 $
26,605 $ 28,514 Other real estate owned
979 579
951 1,149
1,215 Total nonperforming assets
$ 21,897
$ 22,565 $
25,928 $ 27,754
$ 29,729
Ratios Total nonperforming loans to total loans
2.30
% 2.44 % 2.80 % 3.01 % 3.20 % Total nonperforming assets to
total assets
1.74 % 1.83 % 2.14 % 2.28 % 2.41 % Net
charge-offs to average loans (2)
0.41 % 0.58 % 0.44 %
0.47 % 0.54 % Provision for loan losses to average loans (2)
0.40 % 0.45 % 0.43 % 0.48 % 0.62 % Allowance for loan
losses to portfolio loans
1.92 % 1.94 % 2.00 % 2.02 %
2.00 % Allowance to nonperforming loans
83.65 % 79.62
% 71.23 % 66.96 % 62.45 % Allowance to nonperforming assets
79.91 % 77.58 % 68.62 % 64.19 % 59.89 %
CAPITAL & LIQUIDITY Period-end tangible common equity to
assets**
6.90 % 6.77 % 6.46 % 6.49 % 6.53 % Average
equity to assets
8.64 % 8.99 % 8.90 % 8.97 % 9.23 %
Average equity to loans
11.76 % 12.20 % 12.23 % 12.53
% 12.48 % Average loans to deposits
85.88 % 86.38 %
85.25 % 83.73 % 87.01 % Tier 1 leverage ratio (3)
8.61
% 9.22 % 8.95 % 8.73 % 8.88 % Tier 1 risk-based capital
ratio (3)
10.90 % 11.63 % 11.40 % 11.36 % 11.05 %
Total risk-based capital ratio (3)
12.15 % 12.89 %
12.65 % 12.62 % 12.31 % (1) FTE -- fully tax equivalent at
34% tax rate (2) Annualized (3) 3-31-14 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.
LNB Bancorp, Inc.Peter R. Catanese, 440-244-7126Senior Vice
President
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