-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O03NRDZojyGA6GPoVcDG5xEnV+SCL2gt3voCCmBJe4GSOMJKyYSlRlxSbm4vtqo+ lHHqPm7/Kg4T9rjTXpMtaA== 0001157523-06-000763.txt : 20060127 0001157523-06-000763.hdr.sgml : 20060127 20060127104654 ACCESSION NUMBER: 0001157523-06-000763 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060126 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060127 DATE AS OF CHANGE: 20060127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LNB BANCORP INC CENTRAL INDEX KEY: 0000737210 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 341406303 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13203 FILM NUMBER: 06555647 BUSINESS ADDRESS: STREET 1: 457 BROADWAY CITY: LORAIN STATE: OH ZIP: 44052-1769 BUSINESS PHONE: 800-860-1007 8-K 1 a5066290.txt LNB BANCORP, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) 01/26/2006 ------------------------------- LNB BANCORP, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Ohio 0-13203 34-1406303 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 457 Broadway, Lorain, Ohio 44052-1769 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (440) 244-6000 ------------------------ - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. On January 26, 2006, the registrant issued a press release announcing its results of operations for the fourth quarter and year ended December 31, 2005. The press release is attached as Exhibit No. 99.1 Item 9.01 Financial Statements and Exhibits. (d) Exhibits 99.1 Press Release issued by LNB BANCORP, INC., announcing the results of operations for the fourth quarter and year ended December 31, 2005. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. LNB BANCORP, INC. ----------------- (Registrant) Date: January 27, 2006 /s/ Terry M. White ------------------ Terry M. White Executive Vice President, Chief Financial Officer and Corporate Secretary EX-99.1 2 a5066290ex991.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 LNB Bancorp, Inc. Reports 2005 Fourth-Quarter and Year-End Results LORAIN, Ohio--(BUSINESS WIRE)--Jan. 26, 2006--LNB Bancorp, Inc. (NASDAQ:LNBB): -- Fourth-Quarter Net Income increases 57 percent from year-ago period -- Loan growth continues; net interest margin holds up despite pressures -- Additional steps taken to enhance asset quality LNB Bancorp, Inc. (NASDAQ:LNBB), today reported financial results for its fourth quarter and full year ended December 31, 2005. Net income for the fourth quarter of 2005 increased 57 percent, reaching $1,833,000, compared with $1,165,000 in fourth quarter of 2004. Diluted net income per share for the 2005 fourth quarter increased 56 percent to $0.28 versus $0.18 in the comparable period a year ago. For the full year of 2005, the Company reported net income of $6,413,000, or $.97 per diluted share, compared with $7,475,000, or $1.13 per diluted share a year ago. Fourth Quarter Overview "We are pleased to close the year on such a positive earnings note as we continue to take important steps to place us on a solid foundation for the future," said Daniel E. Klimas, president and chief executive officer of LNB Bancorp, Inc. Net interest income was $7,672,000 in the fourth quarter of 2005, an increase of 5.3 percent as compared with the same period a year before. This was primarily driven by earning asset growth, as the net interest margin was 4.08 percent, compared to 4.09 percent during the same period in 2004. Noninterest income was $2,204,000 for the three months ended December 31, 2005, compared with $1,948,000 in the same period in 2004, a 13.1 percent increase. Included in fourth quarter 2004 results was an impairment charge of $1.2 million related to the write-down of agency preferred stock owned by the Company. Deposit service charges were $1,107,000, up 6.3 percent in the quarter as compared to $1,041,000 in the fourth quarter of 2004. This improvement was offset by lower mortgage and trust fees in the fourth quarter. The decline in mortgage banking fees reflects the realignment of the mortgage operation from a fee-based operation to one with a balance sheet growth focus. For the fourth quarter of 2005, noninterest expense was $7,360,000 compared with $7,292,000 for the same period of 2004. Salaries and benefits were $3,404,000, a decrease of $423,000 or 11.0 percent from the same period in 2004, reflecting lower staffing levels. However, higher expenses in several other categories offset this improvement. In particular, outside services were $701,000, an increase of $359,000 or 105 percent in the fourth quarter as compared to $342,000 in the same period last year. This reflects higher internal and external audit costs, higher legal expenses related to corporate governance, the costs associated with a loan sale and IT consulting fees. In the fourth quarter the Company took a major step in improving asset quality. In addition to improvements to the credit process, the Company sold four loan relationships totaling about $5.7 million of principal balances that were substandard credits. "Improving asset quality was one of our primary objectives in 2005," said Klimas. Nonperforming loans decreased to $6,494,000 at December 31, 2005, as compared to $7,452,000 at September 30, 2005, but were up as compared with $4,921,000 at December 31, 2004. The current nonperforming loans have been charged down to estimated collateral levels and are well secured. Klimas said an additional relevant measure of asset quality is the level of potential problem loans, which were $14.4 million at December 31, 2005, compared to $21.6 million at December 31, 2004. Net charge-offs for the fourth-quarter were $1,418,000. Included in the fourth quarter 2005 results were charge-offs of $1,173,000 associated with the sale of four loan relationships. The charge-offs on the four loan relationships were in line with the specific reserves established on these loans at December 31, 2004. The provision for loan losses was $150,000 in the fourth quarter of 2005 as compared to $399,000 in the same period last year. Full Year 2005 Overview The full-year results for 2005 reflect certain costs associated with repositioning the company for growth. "Early in the year, we adopted a strategic plan that called for realigning our staffing levels and recruiting key managers. Many of the costs associated with those important activities were recognized in the second quarter of the year," said Klimas. Despite those costs, the Company posted revenue gains and completed the year with a strong balance sheet. For the full year, net interest income increased 6.8 percent to $30,030,000 from $28,122,000 in 2004. The net interest margin for 2005 was 4.09 percent--up 8 basis points from 4.01 percent in 2004, despite pressures on loan pricing and funding costs throughout the year. Noninterest income was $10,377,000 for the year ended December 31, 2005, as compared with $10,442,000 for 2004. Again, 2004 performance was impacted by an impairment charge of $1.2 million related to the write-down of agency preferred stock owned by the Company. There was improvement in deposit service charges and fees, especially in the last two quarters of 2005. ATM fees and mortgage banking revenue also improved in 2005. Offsetting these improvements was a reduction in other service charges of $899,000. This includes merchant card fees, a business that the Company exited in the fourth quarter of 2004. We also experienced some weakness in trust income due to competition and market conditions. Noninterest expense in 2005 was $30,267,000, an increase of $3,977,000 or 15.1 percent, as compared to $26,290,000, in 2004. As previously disclosed, the Company incurred higher personnel and other noninterest expenses in the second quarter associated with the recruitment of a new management, a realignment of overall staffing, a goodwill impairment charge related to its subsidiary LNB Mortgage, LLC, and writing off various telecommunications contracts. In the second quarter of 2005, these expenses totaled $1.2 million. In addition to these specific activities, noninterest expense was impacted throughout the year by expenditures to improve our compliance with corporate governance standards, compliance with Sarbanes Oxley 404, and to make improvements in internal auditing and technology. For the year ended December 31, 2005, the provision for loan losses totaled $1,248,000 versus $1,748,000 in 2004. The decrease in the provision for loan losses was due to improved asset quality, most notably the sale of four substandard loans for which specific reserves had been established at December 31, 2004. The Company's allowance for loan losses at December 31, 2005, was $6,622,000 compared with $7,386,000 on December 31, 2004. The ratio of the allowance for loan losses to total loans was 1.13 percent at December 31, 2005, as compared to 1.28 percent at December 31, 2004. The allowance for loan losses to nonperforming loans was 102 percent on December 31, 2005, a decrease from 150 percent at the end of 2004. Net charge-offs for the year were $2,012,000 as compared to $2,092,000 for 2004. Included in the fourth quarter 2005 results were charge-offs of $1,173,000 associated with the sale of four loan relationships. In 2005, net charge-offs were .34 percent of average loans compared with 0.38 percent in 2004. Income taxes for the year were $2,479,000 as compared to $3,051,000 in 2004. This is an effective tax rate in 2005 of 27.9 percent as compared to 29.0 percent in 2004. This reflects the lower level of pretax income and new markets tax credits generated by the Company's subsidiary, North Coast Community Development Corporation. Total assets ended the year at $801.1 million, up nearly $20 million from year-end 2004. Total portfolio loans increased by 2.8 percent as compared to year-end 2004, ending the year at $588.4 million. The Company experienced 4.1 percent growth in commercial loans, 51.0 percent increase in purchased installment loans and 7.4 percent growth in home equity lines. Real estate loans offset a portion of this increase declining 16.8 percent. Total deposits at year-end 2005 were $640.2 million, an increase of nearly $35 million. "Amid these changes in 2005, we also marked a year in which we celebrated the 100th anniversary of the company," said Klimas. "This commemoration gave us an opportunity to recommit ourselves to our vision of being a high growth, efficiently managed independent community bank. We are excited about our prospects for the future as we begin our second century of service to our customers and our community. "We believe the foundation has been laid for improved earnings performance in 2006 and beyond," said Klimas. About LNB Bancorp, Inc. LNB Bancorp, Inc. is an $801.1 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 Mortgage LLC and North Coast Community Development Corporation are wholly owned subsidiaries 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 . 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 expressions, 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 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, as well as the risks and uncertainties described from time to time in LNB Bancorp's reports as filed with the Securities and Exchange Commission. We undertake no obligation to review or update any forward-looking statements, whether as a result of new information, future events or otherwise. Consolidated Balance Sheets December 31, --------------------- (Dollars in thousands except share amounts) 2005 2004 - ---------------------------------------------------------------------- Assets (unaudited) Cash and due from banks $23,923 $23,123 Federal funds sold and short-term investments - 3,695 Securities: Available for sale, at fair value 151,629 145,588 Federal Home Loan Bank and Federal Reserve stock 3,645 4,033 - ---------------------------------------------------------------------- Total securities 155,274 149,621 - ---------------------------------------------------------------------- Loans: Loans held for sale 2,586 3,067 Portfolio loans 588,425 572,157 Allowance for loan losses (6,622) (7,386) - ---------------------------------------------------------------------- Net loans 584,389 567,838 - ---------------------------------------------------------------------- Bank premises and equipment, net 10,833 11,493 Other real estate owned 432 420 Bank owned life insurance 13,935 13,335 Intangible assets 3,321 3,801 Accrued interest receivable 3,053 2,594 Other assets 5,961 5,729 - ---------------------------------------------------------------------- Total Assets $801,121 $781,649 - ---------------------------------------------------------------------- Liabilities Deposits Demand and other noninterest-bearing $87,597 $96,280 Savings, money market, and interest-bearing 265,831 280,169 Certificates of deposit 286,788 229,094 - ---------------------------------------------------------------------- Total deposits 640,216 605,543 Securities sold under repurchase agreements and other short-term borrowings 32,616 31,619 Federal Home Loan Bank advances 53,896 69,296 Accrued interest payable 2,126 1,172 Accrued taxes, expenses and other liabilities 3,861 3,445 - ---------------------------------------------------------------------- Total Liabilities 732,715 711,075 - ---------------------------------------------------------------------- Shareholders' Equity Common stock, par value $1 per share, authorized 15,000,000 shares, issued 6,771,867 shares at December 31, 2005 and 6,766,867 shares at December 31, 2004 6,772 6,766 Additional paid-in capital 26,334 26,243 Retained earnings 42,945 41,292 Accumulated other comprehensive loss (2,996) (1,297) Treasury stock at cost, 250,694 shares in 2005 and 125,694 shares in 2004 (4,649) (2,430) - ---------------------------------------------------------------------- Total Shareholders' Equity 68,406 70,574 - ---------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $801,121 $781,649 - ---------------------------------------------------------------------- Consolidated Statements of Income - ---------------------------------------------------------------------- For the Year Ended - ---------------------------------------------------------------------- (Dollars in thousands except share and per share amounts) 2005 2004 2003 - ---------------------------------------------------------------------- Interest Income (unaudited) Loans $38,145 $32,560 $32,759 Securities: U.S. Government agencies and corporations 4,487 3,784 4,155 States and political subdivisions 439 459 610 Other debt and equity securities 224 301 296 U.S. Treasury securities - - - Federal funds sold and short-term investments 137 120 40 - ---------------------------------------------------------------------- Total interest income 43,432 37,224 37,860 Interest Expense Deposits: Certificates of deposit, $100 and over 3,937 1,448 1,447 Other deposits 6,976 5,366 5,814 Federal Home Loan Bank advances 1,862 2,066 1,737 Federal funds borrowed and other short-term borrowings 627 222 198 - ---------------------------------------------------------------------- Total interest expense 13,402 9,102 9,196 - ---------------------------------------------------------------------- Net Interest Income 30,030 28,122 28,664 Provision for Loan Losses 1,248 1,748 2,695 - ---------------------------------------------------------------------- Net interest income after provision for loan losses 28,782 26,374 25,969 Noninterest income Investment and trust services 1,940 2,091 1,762 Deposit service charges 4,219 4,187 4,260 Other service charges and fees 1,895 2,794 3,104 Mortgage banking revenue 959 364 - Income from bank owned life insurance 600 632 772 Other income 479 592 207 - ---------------------------------------------------------------------- Total fees and other income 10,092 10,660 10,105 Securities gains (losses), net 173 (777) 449 Gain on sale of loans 132 181 236 Gain on sale of credit card portfolio - - 832 Gain (loss) on sale of other assets, net (20) 378 2 - ---------------------------------------------------------------------- Total noninterest income 10,377 10,442 11,624 Noninterest Expense Salaries and employee benefits 15,057 12,995 13,814 Net occupancy 1,830 1,633 1,585 Furniture and Equipment 3,001 2,784 2,517 Electronic banking expenses 542 1,257 1,395 Supplies, postage and freight 1,245 1,208 1,137 Outside services 1,925 1,182 1,441 Marketing and public relations 1,249 1,047 762 Ohio Franchise tax 772 729 673 Other expense 4,646 3,455 3,143 - ---------------------------------------------------------------------- Total noninterest expense 30,267 26,290 26,467 - ---------------------------------------------------------------------- Income before income tax expense 8,892 10,526 11,126 Income tax expense 2,479 3,051 3,411 - ---------------------------------------------------------------------- Net Income $6,413 $7,475 $7,715 - ---------------------------------------------------------------------- Net Income Per Common Share Basic $0.97 $1.13 $1.17 Diluted 0.97 1.13 1.17 Dividends declared 0.72 0.72 0.70 Average Common Shares Outstanding Basic 6,612,803 6,631,392 6,615,654 Diluted 6,612,852 6,632,324 6,615,654 - ---------------------------------------------------------------------- LNB Bancorp, Inc. Financial Highlights (Unaudited - Dollars in thousands except Share and Per Share Data) Three Months Ended Twelve Months Ended -------------------------------------------------- Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31, 2005 2005 2004 2005 2004 -------------------------------------------------- END OF PERIOD BALANCES Assets $801,121 $812,437 $781,649 $801,121 $781,649 Deposits 640,216 655,740 605,543 640,216 605,543 Portfolio Loans 588,425 594,493 572,157 588,425 572,157 Allowance for Loan Losses 6,622 7,890 7,386 6,622 7,386 Shareholders' Equity 68,406 69,478 70,574 68,406 70,574 AVERAGE BALANCES Assets: Total Assets $801,045 $804,797 $775,226 $793,287 $759,537 Earning Assets 750,215 751,254 712,725 739,520 707,031 Securities 156,503 157,117 150,227 152,114 150,227 Loans 591,141 589,684 569,644 584,762 551,515 Liabilities and Shareholders' Equity: Total Deposits $643,592 $652,513 $605,627 $635,785 $589,347 Interest Bearing Deposits 557,506 561,038 504,897 543,055 497,042 Interest Bearing Liabilities 639,109 636,721 598,609 624,230 592,815 Total Shareholders' Equity 69,545 70,804 71,032 70,427 69,507 INCOME STATEMENT Net Interest Income $7,672 $7,470 $7,284 $30,030 $28,122 Net Interest Income-FTE (1) 7,720 7,519 7,322 30,231 28,337 Provision for Loan Losses 150 300 399 1,248 1,748 Noninterest Income 2,204 2,608 1,948 10,377 10,442 Noninterest Expense 7,360 6,764 7,292 30,267 26,290 Net Income 1,833 2,157 1,165 6,413 7,475 PER SHARE DATA Basic Net Income Per Common Share $0.28 $0.33 $0.18 $0.97 $1.13 Diluted Net Income Per Common Share 0.28 0.33 0.18 0.97 1.13 Cash Dividends Per Common Share 0.18 0.18 0.18 0.72 0.72 Basic Avg Common Shares Outstanding 6,544,706 6,625,086 6,641,095 6,612,803 6,631,392 Diluted Avg Common Shares Outstanding 6,544,819 6,625,168 6,641,709 6,612,852 6,632,324 KEY RATIOS Return on Average Assets (2) 0.91% 1.06% 0.60% 0.81% 0.98% Return on Average Common Equity (2) 10.46% 12.09% 6.52% 9.11% 10.75% Efficiency Ratio 74% 67% 79% 75% 68% Average Equity to Average Assets 8.68% 8.80% 9.16% 8.88% 9.15% Net Interest Margin (FTE) (1) 4.08% 3.97% 4.09% 4.09% 4.01% Net Charge Offs to Average Loans (2) 0.95% 0.14% 0.72% 0.34% 0.38% Allowance for Loan Losses 1.13% 1.33% 1.29% 1.13% 1.28% ASSET QUALITY Nonperforming Loans $6,494 $7,452 $4,921 $6,494 $4,921 Other Real Estate Owned 432 399 420 432 420 Total Nonperforming Assets 6,926 7,851 5,341 6,926 5,341 Net Charge Offs 1,418 203 1,037 2,012 2,092 (1) FTE -- fully tax equivalent at 35% tax rate (2) Annualized for the three month periods CONTACT: For LNB Bancorp, Inc. John Fuller, 216-978-7643 -----END PRIVACY-ENHANCED MESSAGE-----