EX-99.1 2 a5816784ex99_1.htm EXHIBIT 99.1

Exhibit 99.1

LNB Bancorp, Inc. Reports Improved Third Quarter Results

  • Third quarter 2008 net income up 9.0 percent from a year ago
  • Net interest income increases continue amid national economic crisis
  • Solid foundation provides sound financial footing

LORAIN, Ohio--(BUSINESS WIRE)--October 30, 2008--LNB Bancorp, Inc. (NASDAQ: LNBB) today reported net income of $1,823,000 or $.25 per diluted share for the three months ended September 30, 2008, compared with net income of $1,673,000 or $.23 per diluted share reported for the same period a year ago.

“While we struggle as a nation through the worst financial crisis since the Great Depression, LNB is able to report an earnings increase with strong core operating results in the third quarter,” said Daniel E. Klimas, president and chief executive officer of LNB Bancorp, Inc. Net interest income and noninterest income increased from the second quarter of 2008 as well as the third quarter a year ago.

“Our company continues to be bolstered by the significant strategic investments made over the past three years as well as the important and prudent steps we took last quarter to help cover potential loan losses. The loan loss provision taken in the second quarter has proven to be the right step in light of continued economic pressures,” said Klimas.

“Our third quarter performance demonstrates the strength of our company. Our balance sheet remains strong and the bank continues to remain well-capitalized on all levels,” said Klimas.

“It is difficult to predict when this current economic environment will improve, but we are confident that we have taken appropriate steps to build a solid foundation on which to face these tough times,” said Klimas. “On the national level, we believe that strong measures had to be taken by the government to strengthen the financial services industry. Management and the Board of Directors will continue to carefully consider all of the programs being offered to assist financial institutions in an effort to ensure sound financial footings in the future.”

Third Quarter Performance

Net interest income for the third quarter of 2008 was $8,229,000, a 5.12 percent increase compared to net interest income of $7,828,000 for the third quarter a year ago and higher than the $8,139,000 of net interest income posted in the second quarter of 2008. This strong net interest income performance was accomplished through the bank providing competitive interest rates on both loan and deposit products to customers, while maintaining a healthy balance sheet.

Net interest margin was 3.24 percent in the third quarter this year, compared to 3.31 percent in the third quarter a year ago as well as the second quarter 2008.

Noninterest income was $3,158,000 for the third quarter of 2008, up 5.13 percent from $3,004,000 in the same quarter a year ago and $3,154,000 in the second quarter of 2008. The second quarter of 2008 included $217,000 from the redemption of bank owned life insurance. Income from deposit service charges and other fees continue to be strong.

Noninterest expense was $8,498,000 in the third quarter of 2008, compared to $8,334,000 for the same period in 2007, but down from $8,840,000 in the second quarter of 2008. Other real estate owned expense was $285,000 in the third quarter of 2008 representing a substantial increase over the third quarter of 2007. Salaries and employee benefits expense declined 6.72 percent in the third quarter of 2008 compared to the third quarter a year ago. Expense management continues to be a major emphasis of the company.

In terms of asset quality, the allowance for loan losses at September 30, 2008 was $11,355,000 or 1.43 percent of outstanding loans, due in part to the increased loan loss provision taken in the second quarter of 2008. Net charge-offs for the third quarter of 2008 were $990,000, down from $1,094,000 in the third quarter a year ago, but up from $790,000 during the second quarter of 2008. The allowance to nonperforming loans declined from 72.66 percent in the third quarter of 2007 to 65.09 percent in the third quarter of 2008. The allowance to nonperforming loans in the second quarter of 2008 was 76.96 percent.

Total assets at the end of the third quarter 2008 were $1.1 billion, compared to $1.0 billion at the end of the third quarter of 2007. Total portfolio loans at September 30, 2008 were $793,542,000, up from $728,624,000 at September 30, 2007. Total deposits at the end of the third quarter this year were $895,662,000, up from $834,323,000 at the end of last year’s third quarter.

Nine-month Results

For the first nine months of 2008, net income was $2,135,000, or $.29 per diluted share, compared with $3,844 or $.56 per diluted share for the same period a year ago. Net interest income was $23,888,000 for the first nine months of 2008, compared to $21,855,000 in the first nine months of 2007.

Noninterest income was $9,646,000 for the nine months ended September 30, 2008, a 14.48 percent increase from the $8,426,000 for the first nine months of 2007.

For the first nine months of 2008, noninterest expense was $25,860,000, compared with $23,701,000 for the first nine months of 2007. During the first quarter of this year, a special shareholders meeting was held at the request of a shareholder of the Corporation which added additional expense, net of tax, of approximately $572,000.

About LNB Bancorp, Inc.

LNB Bancorp, Inc. is a $1.1 billion financial 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 Morgan Bank serve customers through 21 retail-banking locations and 29 ATMs in Lorain, eastern Erie, western Cuyahoga and Summit counties. North Coast Community Development Corporation is a wholly owned subsidiary of The Lorain National Bank. Brokerage services are provided by the bank through an agreement with Investment Centers of America. 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, changes in trade, monetary or fiscal policy, continued disruption in the fixed income markets, adverse capital markets conditions, continued disruption in the housing markets and related conditions in the financial markets, inflation, changes in government, regulatory practices, requirements or expectations and changes in general economic conditions and competition in the geographic and business areas in which LNB Bancorp, Inc. conducts its operations, particularly in light of the recent consolidation of competing financial institutions, 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.

LNB Bancorp, Inc.
Supplemental Financial Information
(Unaudited - Dollars in thousands except Share and Per Share Data)
         
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2008 2008 2007 2008 2007
END OF PERIOD BALANCES
Assets $ 1,109,501 $ 1,072,974 $ 1,019,197 $ 1,109,501 $ 1,019,197
Deposits 895,662 861,202 834,323 895,662 834,323
Portfolio loans 793,542 769,785 728,624 793,542 728,624
Allowance for loan losses 11,355 11,874 7,951 11,355 7,951
Shareholders' equity 80,340 78,747 81,340 80,340 81,340
 
AVERAGE BALANCES
Assets:
Total assets $ 1,082,869 $ 1,065,623 $ 1,019,758 $ 1,064,967 $ 932,543
Earning assets 1,010,388 987,829 937,937 989,045 862,483
Securities 219,642 223,139 200,084 218,246 179,786
Portfolio loans 790,746 764,690 737,853 763,577 682,697
Liabilities and shareholders' equity:
Total deposits $ 870,622 $ 864,217 $ 820,578 $ 863,643 $ 771,806
Interest bearing deposits 783,264 777,357 734,185 777,790 688,089
Interest bearing liabilities 907,753 885,878 841,952 885,453 763,745
Total shareholders' equity 79,292 82,898 81,964 83,532 76,455
 
INCOME STATEMENT
Net interest income $ 8,229 $ 8,139 $ 7,828 $ 23,888 $ 21,855
Net interest income-FTE (1) 8,342 8,244 7,927 24,202 22,137
Provision for loan losses 471 4,664 441 5,609 1,677
Noninterest income 3,158 3,154 3,004 9,646 8,426
Noninterest expense 8,498 8,840 8,334 25,860 23,701
Taxes     595       (1,076 )     384       (70 )     1,059  
Net income (loss)     1,823       (1,135 )     1,673       2,135       3,844  
Total revenue 11,387 11,293 10,832 33,534 30,281
 
PER SHARE DATA
Basic net income (loss) per common share $ 0.25 $ (0.16 ) $ 0.23 $ 0.29 $ 0.56
Diluted net income (loss) per common share 0.25 (0.16 ) 0.23 0.29 0.56
Cash dividends per common share 0.09 0.18 0.18 0.45 0.54
Basic average common shares outstanding 7,295,663 7,295,663 7,295,663 7,295,663 6,889,953
Diluted average common shares outstanding 7,295,663 7,295,663 7,295,663 7,295,663 6,889,953
 
KEY RATIOS
Return on average assets (2) 0.67 % -0.43 % 0.65 % 0.27 % 0.55 %
Return on average common equity (2) 9.15 % -5.51 % 8.10 % 3.41 % 6.72 %
Efficiency ratio 73.90 % 77.56 % 76.24 % 76.40 % 77.55 %
Noninterest expense to average assets (2) 3.12 % 3.34 % 3.24 % 3.24 % 3.40 %
Average equity to average assets 7.32 % 7.78 % 8.04 % 7.84 % 8.20 %
Net interest margin 3.24 % 3.31 % 3.31 % 3.23 % 3.39 %

Net interest margin (FTE) (1)

3.28 % 3.36 % 3.35 % 3.27 % 3.43 %
 
ASSET QUALITY
Nonperforming loans $ 17,445 $ 15,428 $ 10,942 $ 17,445 $ 10,942
Other real estate owned 1,799 2,351 3,053 1,799 3,053
Total nonperforming assets 19,244 17,779 13,995 19,244 13,995
Net Charge Offs 990 790 1,094 1,084 1,530
Total nonperforming loans to total loans 2.20 % 2.00 % 1.50 % 2.20 % 1.50 %
Total nonperforming assets to total assets 1.73 % 1.66 % 1.37 % 1.73 % 1.37 %
Net charge-offs to average loans (2) 0.50 % 0.42 % 0.59 % 0.19 % 0.30 %
Allowance for loan losses 1.43 % 1.54 % 1.09 % 1.43 % 1.09 %
Allowance to nonperforming loans 65.09 % 76.96 % 72.66 % 65.09 % 72.66 %
 
(1) FTE -- fully tax equivalent at 34% tax rate
(2) Annualized
Consolidated Balance Sheets
 
September 30, 2008 December 31, 2007
(unaudited)
(Dollars in thousands except share amounts)
ASSETS
Cash and due from Banks $ 45,665 $ 23,523
Interest-bearing deposits in other banks 350 100
Securities: (Note 5)
Trading securities, at fair value 33,559 33,402
Available for sale, at fair value 172,087 179,324
Federal Home Loan Bank and Federal Reserve Stock   4,839     4,579  
Total securities   210,485     217,305  
Loans held for sale 5,677 4,724
Loans:
Portfolio loans 793,542 753,598
Allowance for loan losses   (11,355 )   (7,820 )
Net loans   782,187     745,778  
Bank premises and equipment, net 12,408 13,328
Other real estate owned 1,799 2,478
Bank owned life insurance 15,499 15,487
Goodwill, net 21,570 21,570
Intangible assets, net 1,176 1,280
Accrued interest receivable 4,186 4,074
Other assets   8,499     6,998  
Total Assets $ 1,109,501   $ 1,056,645  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Demand and other noninterest-bearing $ 90,912 $ 88,812
Savings, money market and interest-bearing demand 308,221 331,306
Certificates of deposit   496,529     436,823  
Total deposits   895,662     856,941  
Short-term borrowings 29,876 42,105
Federal Home Loan Bank advances 73,857 44,207
Junior subordinated debentures 20,620 20,620
Accrued interest payable 3,560 4,620
Accrued taxes, expenses and other liabilities   5,586     5,499  
Total Liabilities   1,029,161     973,992  
 
Shareholders' Equity

Common stock, par value $1 per share, authorized 15,000,000 shares, issued 7,623,857 shares at September 30, 2008 and December 31, 2007

7,624 7,624

Preferred Shares, Series A Voting, no par value, authorized 750,000 shares, none issued at September 30, 2008 and December 31, 2007.

-
Additional paid-in capital 37,745 37,712
Retained earnings 41,079 42,951
Accumulated other comprehensive income (loss) (16 ) 458

Treasury shares at cost, 328,194 shares at September 30, 2008 and December 31, 2007

  (6,092 )   (6,092 )
Total Shareholders' Equity   80,340     82,653  
Total Liabilities and Shareholders' Equity $ 1,109,501   $ 1,056,645  
Consolidated Statements of Income (unaudited)
 
Three Months Ended September 30, Nine Months Ended September 30,
2008   2007 2008   2007
(Dollars in thousands except share and per share amounts)
Interest Income
Loans $ 11,976 $ 13,437 $ 36,514 $ 36,610
Securities:
U.S. Government agencies and corporations 1,861 2,148 5,795 5,310
State and political subdivisions 203 157 551 443
Trading securities 209 - 738 -
Other debt and equity securities 82 78 214 204
Federal funds sold and short-term investments   54   51   130     338
Total interest income 14,385 15,871 43,942 42,905
 
Interest Expense
Deposits 5,135 6,705 17,041 18,436
Federal Home Loan Bank advances 646 635 1,769 1,235
Short-term borrowings 93 347 354 812
Trust preferred securities   282   356   890     567
Total interest expense   6,156   8,043   20,054     21,050
Net Interest Income 8,229 7,828 23,888 21,855
Provision for Loan Losses   471   441   5,609     1,677
Net interest income after provision for loan losses 7,758 7,387 18,279 20,178
 
Noninterest Income
Investment and trust services 441 547 1,560 1,593
Deposit service charges 1,258 1,239 3,559 3,457
Other service charges and fees 704 605 2,030 1,706
Income from bank owned life insurance 154 182 735 531
Other income   67   128   736     273
Total fees and other income 2,624 2,701 8,620 7,560
Securities gains (losses), net 223 2 506 261
Gains on sale of loans 298 277 642 546
Gains (losses) on sale of other assets, net   13   24   (122 )   59
Total noninterest income 3,158 3,004 9,646 8,426
 
Noninterest Expense
Salaries and employee benefits 3,828 4,104 11,467 11,862
Furniture and equipment 1,049 952 3,080 2,566
Net occupancy 556 593 1,816 1,683
Outside services 522 488 1,996 1,317
Marketing and public relations 247 321 829 936
Supplies, postage and freight 408 353 1,092 986
Telecommunications 189 232 635 623
Ohio Franchise tax 225 188 670 604
Intangible asset amortization 36 57 104 133
Other real estate owned 285 58 892 305
Electronic banking expenses 237 150 747 593
Loan and collection expense 256 236 716 644
Other expense   660   602   1,816     1,449
Total noninterest expense   8,498   8,334   25,860     23,701
Income before income tax expense 2,418 2,057 2,065 4,903
Income tax expense (benefit)   595   384   (70 )   1,059
Net Income (Loss) $ 1,823 $ 1,673 $ 2,135   $ 3,844
Net Income (Loss) Per Common Share
Basic $ 0.25 $ 0.23 $ 0.29 $ 0.56
Diluted 0.25 0.23 0.29 0.56
Dividends declared 0.09 0.18 0.45 0.54
Average Common Shares Outstanding
Basic 7,295,663 7,295,663 7,295,663 6,889,953
Diluted 7,295,663 7,295,663 7,295,663 6,889,953

CONTACT:
For LNB Bancorp, Inc.
W. John Fuller, 216-978-7643